Transcript AP automation
Paper to Electronic: Automating Receivables
Bill Coward, VP Electronic Receivables Consultant
June11, 2014
Agenda Trends What is causing new payment trends Who is impacted Minimize paper – transition to electronic receivables How to move forward efficiently and cost-effectively Highlight best practices and payment trends Leverage technology to navigate the complexity of payment processing Identify the pricing components of card processing Outline best practices to insure lowest possible costs are achieved
Innovation is driving change
trend
Shopping
trend
Society
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Which industries need a payments strategy?
© 2013 Wells Fargo Bank, N.A. All rights reserved. Member FDIC. 3
Not just retailers anymore
Government
• Most widely held procurement cards are with the Federal government • Moving toward pre-paid/stored value cards
Healthcare
• Healthcare reform has decreased reimbursement: providers are being asked to do more with less • Increased upfront collection reduces DSO/Cost collection • Flexible Spending Accounts - $2,500
Insurance and Utilities
• Mass exodus from paper to electronic • Recurring payments • Fraud risk is low © 2013 Wells Fargo Bank, N.A. All rights reserved. Member FDIC. 4
Why?
1) Mail-in payments declining 2) Biller direct is preferred 3) Card payments still growing 4) The underbanked need alternatives 5) Finally embracing e-bills © 2013 Wells Fargo Bank, N.A. All rights reserved. Member FDIC. 5
Common goals…
Reduce cost, complexity and risk
© 2013 Wells Fargo Bank, N.A. All rights reserved. Member FDIC.
Consolidated reporting Single integration for multiple channels POS Web CC/IVR Mobile ERP MOTO
6
The AR
treasure
hunt
7
Take your AR to best-in-class
Clear
payments in
1.3
days
Reduce
manual intervention by
50%
Adopt new technology with
$0
capital expenses 8 Source: May 2012 Aberdeen study
The changing AR landscape Increased complexity, cost, risk Dual processes for checks, electronic payments High cost to maintain, upgrade infrastructure USPS service reductions Regulatory pressures No fallback with single-site operations 9
How leaders unlock hidden value
Today Best-in-class
Aging Silo’d
$$$
Reactive Visibility and control Technology Payment channels Cost to process Time to process Customer service Advanced Integrated
$
Proactive 10
Your AR treasure map
Electronic billing Current technology Automated posting Multiple payment channels Reduced exceptions Single data file
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Where do you begin?
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Present bills/statements electronically
How it works
Leverage one supplier, one combined billing file for electronic and print delivery
Value
Eliminates print/mail expense Faster delivery improves DSO Greater efficiency for AR staff 13
Enable multiple payment channels
How it works
Manage all channels in one workflow Deposit all items electronically
Benefits
Increase customer satisfaction Cut processing costs Improve DSO
Give your customers choices
14
Take your AR to best-in-class
Clear
payments in
1.3
days
Reduce
manual intervention by
50%
Adopt new technology with
$0
capital expenses 15 Data Source: May 2012 Aberdeen study
Best-in-class accounts receivables 9x better Time for payment to clear (days) 11,7 5x better Manual intervention (% invoices) 79,9% 4,1 1,3 Best Average Trailing Source: Aberdeen, May 2012 44,9% 16,2% Best Average Trailing 5x better Accounts Receivable past due 16,1% 8,6% 3,3% Best Average Trailing 16
Payment Landscape Number of Transactions
(billions)
Source: Nilson, Federal Reserve, NACHA, ATM&Debit News, WF Analysis
Debit card Credit card ACH Checks Stored value
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Things to think about…
Leverage technology to navigate the complexity of payment processing
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Interchange
What is it?
A percentage fee applied, according to Visa/MasterCard regulations, to the dollar value of each transaction.
Who Pays for it?
The fee is paid by the acquirer to the issuer. This cost is then passed through to you.
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What do Merchants Pay?
Components of Merchant Pricing
Additional Fees 2% Processing 9% Assessments 4% Interchange 85%
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What impacts interchange costs
Payment Channel Card Type Merchant Category Code System Configuration
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Interchange optimization
Best Practice
You are in control.
Why?
•Address Verification Service •Settle batches on time •Send correct processing flags •B2B Line item details •Review statements monthly and track for anomalies •Be aware of Card Brand changes •Periodic reviews with your acquirer •Provides some risk mitigation and lower interchange rate •Lower interchange rate, easier reconciliation •Lower interchange rate, improves chargeback rights •Lower interchange, data passes to Payer •Quickly identifies process issues •Spring/Fall releases often have systemic changes that impact interchange •Confirms process optimization 23
Level III and Large Ticket Data Requirements
Level II Data
Tax Indicator denoting presence of sales tax Itemized Sales Tax amount (must be greater than $0) Customer Code
Level III Data
All Level II Data Transaction Summary (order date, invoice number, etc.) Line Item Detail (i.e. item description, product code, quantity, unit cost)
Reality Check
– There are limited software and payment
gateway applications that are certified to capture the required data to process Level III and Large Ticket transactions
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“Do not lose sight of the importance of quality. Selecting and enabling technology is more complicated than checking a box or finding the lowest-cost provider.” Article by The Aberdeen Group 25