RDC on Steroids: Integrated Receivables Roundtable

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1 RDC on Steroids: Integrated Receivables Roundtable Bob Meara, Celent Jason Olson, Wausau Financial Ed McLaughlin, Riverstone Partners November 6, 2015 Be sure to tweet about the #RDCSummit and

2 Integrated Receivables (IR) Session Objectives Understand the spectrum of definitions of, and use-cases for Integrated Receivables and RDC s role Identify specific market opportunities and industry verticals Discuss the specific technology and functional requirements found in best-in-class solutions Present the current state of the IR industry and chart the foreseeable future. Copyright 2015, RemoteDepositCapture.com 2

3 Some Integrated Receivables (IR) Questions What is meant by Integrated Receivables (IR)? What do corporate customer mean when they say it? What do a banks think when they are offering it? Who needs it or wants it, and why? What functional areas of AR does it really include? How do you do it, and is it cost justified? Is there opportunity for greater services and automation in Accounts Receivables (AR)? Copyright 2015, RemoteDepositCapture.com 3

4 Some Integrated Receivables Definitions The aggregation of receivables and business information into a single repository which provides the ability to automate processes to manage the information and accelerate cash application and forecasting Integrated Receivables Hub aggregation of payment channels with consolidated A/R posting files Source Celent: Integrated Receivables Vendors Integrated receivables isn t a new idea, but its definition is in flux as are solutions. Source Celent: Integrated Receivables Vendors Source: Wausau Copyright 2015, RemoteDepositCapture.com 4

5 Banks have differing visions of integrated receivables Large banks have a more robust vision Vision/Understanding of Integrated Receivables 73% Banks <$100b Banks >$100b 44% 25% 27% 19% 13% 0% 0% Extracts, translates & loads payment and remit. files from mutliple payment and remit. channels to provide a consolidated file for importing into client ERP systems. Provides bank ops. and comm'l. clients a single portal to view, analyze, post and report on consolidated receivables, regardless of payment or remittance delivery methods Same, plus a single workflow to resolve exceptions - while delivering a single file with remittance information from all sources to automate posting Same, plus data visualization and analytics to identify and correct recurring problems and I.D. opportunities to improve client's DSO. Low Capability High Source: Celent survey of US banks, September 2014, n=43 Copyright 2015, RemoteDepositCapture.com 5

6 Integrated receivables management: A spectrum of capability Delivering a wide mix of client benefits Consolidated Receivables Reporting Electronic Lockbox Integrated Receivables Management Capability Extracts, translates and loads payment and remittance files from multiple payment and remittance channels Provides a consolidated file for importing into client ERP systems Client Benefits Faster funds availability Reduced internal keying effort to post cash Source: Celent Additionally provides bank ops. And commercial clients a single portal to view, analyze, post and report on consolidated receivables. Less effort to post cash Further improves same-day cash posting rates and DSO Process in-place as receivables migrate from check to electronic payments Additionally provides a single workflow to resolve exceptions in order to maximize STP rates and achieve maximum same-day cash posting. Can also include data visualization and analytics to identify and correct recurring problems and identify opportunities that can improve client s DSO Less effort to post cash Potential for significant improvements in DSO Copyright 2015, RemoteDepositCapture.com 6

Defining the Need WAUSAU s experience and sponsorship of research by Treasury Strategies and Aite Group have helped to define the Integrated Receivables concept in the marketplace.

7 Defining the Need WAUSAU s experience and sponsorship of research by Treasury Strategies and Aite Group have helped to define the Integrated Receivables concept in the marketplace. Key Findings DSO average 44.5 days Checks still largest payment group at 42% of payments 50% of payments are not Straight Through Processing (STP) 33% of companies significantly impacted by $500K annually in unauthorized discounts 70% of companies are in-house processing today Nearly 60% of companies surveyed are dissatisfied with their company s receivables and payments application process Source: Aite Group and Wausau Financial Survey of Large Corporate (annual revenue of US$1 billion or more) Receivables or Treasury Managers, March April 2010 Copyright 2015, RemoteDepositCapture.com 7

9 IR Capabilities - Perceived Perceived Importance of Integrated Receivables Solution Capabilities Consolidated receivables reporting Supports all pmt. & invoice receipt mechanisms Consolidate rcvbles. streams into single posting file Configurable client portal with single sign-on Integrates into multiple ERP systems Robust information security AR matching capability 97% 90% 90% 89% 86% 83% 79% Native long-term data and image archive Automates reconcilement through business rules Configurable alerts Independent of, but integrated w/ WLBX platform(s) Support for mobile approvals Rich info. reporting, visualization & analytics Bank agnostic 69% 69% 66% 59% 55% 52% 45% 0% 20% 40% 60% 80% 100% Top 2-box Importance (%) Source: Celent survey of top-100 US banks, October 2014, n=37 Q: When understood in the broadest context from the previous question, Integrated Receivables Management portals could perform multiple functions. Which capabilities are most important in your opinion? Copyright 2015, RemoteDepositCapture.com 9

10 IR Capabilities - Realized Integrated Receivables Capabilities Banks >$100b in Assets Consolidate mult. rcvbles. into single posting file Independent of, but integrated with legacy lockbox 80% 80% 20% 20% Flexible, configurable client portal with single sign-on 60% 40% Native long-term data and image archive 50% 40% ERP systems integration (e.g., Oracle, SAP) AR matching capability (a.k.a.. invoice matching) 60% 70% 40% 30% Support all payment & invoice receipt mechanisms 40% 50% Configurable alerts 33% 22% Automated reconcilement w/ bus. rules & data Information reporting, visualization, mining and 30% 40% 60% 50% Bank agnostic 20% 20% Support for mobile approvals 0% 63% Source: Celent survey of top-100 US banks, October 2014, n=37 0% 20% 40% 60% 80% 100% In Production Planning to Offer Considering No plans Copyright 2015, RemoteDepositCapture.com 10

Integrating Receivables Can Accelerate Cash and Insights AGGREGATE AUTOMATE ACCELERATE 1 LOCKBOX 5 CASHIERING IVR CHECK 3 4 INTERNET MOBILE EBPP 2 CASH CARD ACH INTEGRATED RECEIVABLES HUB OUTPUT

11 Integrating Receivables Can Accelerate Cash and Insights AGGREGATE AUTOMATE ACCELERATE 1 LOCKBOX 5 CASHIERING IVR CHECK 3 4 INTERNET MOBILE EBPP 2 CASH CARD ACH INTEGRATED RECEIVABLES HUB OUTPUT EXPORTS EXTRACTS POSTING CLEARING EDI WIRE WIRE MAILROOM CAPTURE 1. Pay through any location: Online, offline, remote, central 2. With any payment type: Paper Electronic Card 3. Into one receivables hub: Transaction aggregation Business rules Exception handling Fraud detection and regulator compliance Accounts Payable 4. To gain consolidated outputs: Intelligent settlement ERP update Treasury reporting Common archive for all payments 5. And integrated receivables and insights: a. Provide ability to approach 100% straight-through processing for application of cash to A/R b. System interfaces to banks and corporations c. Payment analytics d. Deductions management e. Document Management & Workflow Source: Wausau Copyright 2015, RemoteDepositCapture.com 11

Paper still reigns in B2B payments after a decade of epayments push A similar story among C2B billers Businesses will live with a blend of electronic and paper AR and AP workflow for the midterm Most

Fewer offer invoicing solutions to do so integrated payables solutions are compelling among the few banks that offer them With bank inaction, third parties stepped in How firms receive remittance

13 Paper still reigns in B2B payments after a decade of epayments push A similar story among C2B billers Businesses will live with a blend of electronic and paper AR and AP workflow for the midterm Most banks offer payment solutions to manage this transition. Fewer offer invoicing solutions to do so integrated payables solutions are compelling among the few banks that offer them With bank inaction, third parties stepped in How firms receive remittance data (2014) 70% 60% 50% 59% 52% Mean % of B2B payments made by check Source: AFP Electronic Payments Surveys Payment method used to pay suppliers 40% 30% 20% 10% 22% 31% 6% 5% 13% 12% % Paper Electronic (EDI/portal) Fax Source: Federal Reserve Remittance Coalition survey, July 2012, n=481, PayStream Advisors survey 2014, n=300 Copyright 2015, RemoteDepositCapture.com 13

14 IR Integral Components The building blocks include the items from your lockbox provider becoming more closely integrated to your A/R system: Document Imaging A/R Matching Long Term Image Archive Integration Of Field or Stranded Payments (RDC) Decisioning Services Extending A/R Matching & Decisioning Exception Processing and Resolution Integrating Even Further Into A/R and ERP Systems Copyright 2015, RemoteDepositCapture.com 14

15 RDC s Role in Lockbox and IR Enables Remote Locations to scan checks and corresponding remittance documents and transmit directly into a corresponding lockbox or IR Hub Remote Lockbox service is designed to address customer issues such as: Stranded payments Overnight courier fees Mail float Desk drawer float Integrating payments into a single Receivables workflow Leverages Remote/Mobile Check Deposit technology Web-based software application RDC offers more than just a Remote Lockbox Copyright 2015, RemoteDepositCapture.com 15

16 Key Solution Needs Ability to aggregate all receivables payments, regardless of payment method, source or location Real-time (or near real-time) access Robust search and reporting features Exceptions management for all payment channels A/R Matching Workflow enabled Business rules engines Consolidated data transmissions and reporting Alerts, notifications and delivery Source: Wausau Copyright 2015, RemoteDepositCapture.com 16

17 RDC Lockbox Remittance Functionality Can be used in conjunction with existing lockbox(es) or stand alone Captures document scan lines Check & associated payment document scanning Data capture for A/R transmission: Data captured at the field capture point Data captured through the Lockbox workflow Leverages single scanning device to scan checks and up to 8 ½ X 11 documents Capture front and back of documents All scanned transactions are combined with existing paper lockbox items and workflow Data captured is included in daily accounts receivable file Transaction images can be included in an image transmission, available on-line and/or on a monthly CD-ROM Copyright 2015, RemoteDepositCapture.com 17

reporting and extracts across multiple payment types Improve exception management for faster cash application For the FI.

18 Integrated Receivables Value Propositions For a corporate customer... Provides an automated interface to receive, review, and apply multiple payment types in a single experience Consolidates reporting and extracts across multiple payment types Improve exception management for faster cash application For the FI... Solving for customers needs Enables the offering of a truly integrated payment solution Creates customer loyalty Value add solutions to increase revenue Source: Wausau Copyright 2015, RemoteDepositCapture.com 18

19 Integrated Receivables Business Drivers Financial Institutions Convergence of Payment types Reduces costs, aggregation of transactions across payments channels Improve customer service, through better reporting and improved clearing Share data (information) across multiple applications Improves information management Transparency Improved GRC risk management and fraud prevention Competitive - Faster cycle time to introduce new products and services Corporations Improved availability/cash flow Integration into ERP and Financial Applications SAP, Oracle, etc. Purchase to Pay lifecycle management Unified process flow Efficiencies and cost reduction Reduced DSO Copyright 2015, RemoteDepositCapture.com 19

20 Many businesses show great enthusiasm to migrate to e-payments But appear resigned to a blended environment Attitudes Concerning E-Payment Migration Attitudes Concerning E-Payment Migration Industrywide migration to electronic payments is a good thing. I welcome any and all movement in that direction. Electronic payments have clear benefits, but the current blended (paper + electronic) environment is complex and costly to manage. 0% 19% 19% 38% 56% 67% Industrywide migration to electronic payments is a good thing. I welcome any and all movement in that direction. Electronic payments have clear benefits, but the current blended (paper + electronic) environment is complex and costly to manage. 13% 11% 22% 28% 50% 64% The benefits of electronic payments really can t be realized until paper is eliminated from the workflow. None of the above. 0% 11% 19% 22% 25% 25% >$100m $10-$100m <$10m The benefits of electronic payments really can t be realized until paper is eliminated from the workflow. None of the above. 13% 11% 11% 14% 25% 39% >5k 500-5k <500 0% 20% 40% 60% 80% Resp. (%) 0% 20% 40% 60% 80% Resp. (%) Source: Celent survey of AR Practitioners, August 2015, n=113 Q: Thinking about how your receivables management has changed in recent years, which statement most closely matches your position? Copyright 2015, RemoteDepositCapture.com 20

21 Stated AR goals vary considerably across firms and by size of firm Many of these goals can be addressed by an integrated receivables solution Stated AR Goals by Annual Revenue Stated AR Goals by Invoice Volume Increase electronic payment rates for AR 29% 30% 58% Reduce DSO 20% 39% 60% Reduce AR processing costs 50% 23% 33% Increase electronic payment rates for AR 20% 30% 53% Reduce DSO Migrate payers to electronic payments using your preferred incoming 7% 21% 48% 35% 50% 42% Migrate payers to electronic payments using your preferred Reduce AR processing costs 20% 40% 27% 33% 47% 27% Increase completeness and streamline handling of remittance information 25% 33% Increase completeness and streamline handling of remittance information 7% 21% 33% Reduce unauthorized discounting 14% 8% 25% Reduce unauthorized discounting 20% 6% 20% Increase same-day AR posting rates Improve AR straight through processing (STP) rates 7% 13% 17% 7% 13% 8% 0% <$10m 20% 40% $10-$100m 60% 80% > 100% $100m 120% Increase same-day AR posting rates Improve AR straight through processing (STP) rates 7% 6% 27% 7% 12% 13% 0% 20% <500 40% 60% 500-5k 80% 100% >5k 120% Source: Celent survey of AR Practitioners, August 2015, n=113 Q: What specific AR goals do you have for your organization this year? Choose all that apply. Copyright 2015, RemoteDepositCapture.com 21

22 Firms with comparatively high DSO* are focused on reducing it Among those firms, other AR goals are secondary Stated AR Goals Firms with high DSO are focused on lowering it Reduce DSO 30% 50% Increase electronic payment rates for AR Migrate payers to electronic payments using your preferred incoming methods 31% 30% 36% 38% Firms with low DSO are more likely to focus on cost reduction Reduce AR processing costs 19% 42% Increase completeness and streamline handling of remittance information 18% 25% Reduce unauthorized discounting 9% 15% High DSO Increase same-day AR posting rates 6% 19% Low DSO Improve AR straight through processing (STP) rates 13% 9% 0% 20% 40% 60% Resp. (%). Source: Celent survey of AR Practitioners, August 2015, n=113 Q: What specific AR goals do you have for your organization this year? Choose all that apply * low DSO = less than 30 days and days. High DSO = over 40 days. Very few firms reported DSO over 60 days Copyright 2015, RemoteDepositCapture.com 22

23 Respondents reflect a modest likelihood to pay for AR improvements Particularly to reduce work and improve DSO Pending a compelling business case, firms rated a number of AR automation benefits similarly, but with wide-ranging differences among firms. Among larger firms: Receiving pmt using preferred methods (75% vs. 57%) Among high volume billers: Collecting/matching remit and payments (86% vs. 54%) Accelerating cash application (71% vs. 53%) Reducing unauthorized deductions (71% vs. 23%) Reducing manual AR work (71% vs. 62%) Among AR staff (weighted average): Getting paid for sales faster (3.8 vs 3.6) Reducing manual AR work (4.0 vs. 3.7) Having a single dashboard (3.9 vs. 3.5) Streamling audit and reconciliation work for Accounting (reconciling bank Simplifying on-going customer service and long term record retention Likelihood to Pay for AR Automation (top 2-box) Reducing manual AR work and improving your ability to do more with Collecting and managing matching of remittance and payments Having a single dashboard for all paper and electronic receivables information Improving collection rates Accelerating cash application Reducing unauthorized deductions Source: Celent survey of AR Practitioners, August 2015, n=113 Q: If the monetary benefit of an investment in AR automation could be demonstrated, how likely would you be to pay for a service that solves for the following business needs? 36% 47% 53% 51% 57% 57% 56% 0% 20% 40% 60% % Top 2-box (4 or 5 on 5 point scale) 62% Copyright 2015, RemoteDepositCapture.com 23

24 What Does This All Mean? Many definitions for IR and use the definition that works for your organization and goals Market data supports the need in the market Provide the solutions that help your customers manage their business Find the right solution for your organization But, Source: Wausau Copyright 2015, RemoteDepositCapture.com 24

26 There s opportunity for greater penetration of AR services beyond IR solutions Non-banks have greatest inroads with EIPP and merchant services Accounts Receivables Services Usage Wire Transfers received 73% 3% ACH items received 68% 5% ACH origination 62% 4% Merchant services/credit card processing 53% 30% Remote deposit capture 36% 5% Wholesale or wholetail lockbox 27% 7% Electronic Invoice Presentation & Payment 26% 31% Online Bill Pay service 24% 20% Information reporting 22% 9% Retail lockbox EDI or Private Network 18% 14% 7% 16% Bank % Non-Bank% ERP System 11% 22% Treasury Workstation 9% 8% Remittance consolidation and matching 7% 18% Supply chain financing 4% 7% Trade finance 4% 9% Consolidated receivables reporting 4% 14% 0% 20% 40% 60% 80% 100% Resp. (%) Source: Celent survey of AR Practitioners, August 2015, n=113 Q: What services are you currently using to help you more effectively meet your Receivables goals? Choose the services and indicate if you a re receiving from a bank or company other than a bank. Copyright 2015, RemoteDepositCapture.com 26

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