New frontiers in payments epayables and Global Card programs SoCal EXPO 2014 Presented by: Cynthia D. Watts Director, Senior Product Solution Specialist Manager April 24, 2014
agenda Taking steps towards AP automation globally What s trending now? Going global Key decisions Make your move 2
Taking steps towards AP automation globally
Objectives Effectively manage your payables Improved AP efficiency Increased days payable outstanding Enhanced cash flow Controlled financing and processing costs Strengthened supplier relationships SIMPLE STREAMLINED EFFECTIVE 4
Components of automated payables Internal processing External processing Payment execution Data warehousing How is Requisition initiated and managed within ERP system? How are approvers approving the requisition? How is PO created? How is PO sent to Supplier? How is remittance info sent to Supplier? How is invoice received from supplier? How are payments made to suppliers? When are payments made to suppliers? How is data captured and stored? How are supporting documents captured and stored? What reports are produced? How is invoice processed? How are reports produced? How is reconciliation completed? 5
What s trending now?
Card continues to grow globally Card growth trends Card usage continues in key markets around the globe Key areas of significant volume growth +7.3% EMEA +10.1% Brazil +18.1% APAC +32% China $6.4 trillion Total transactional value of global card purchases 43% Percentage of commercial card purchases initiated outside of the U.S by 2015 (4.8% growth) 7 Sources: Capgemini Global Trends in the Payment Card Industry: Issuers, 2012;
Procurement & payables card evolving B2B Opportunities* Among multi-national corporations, 37% have established purchasing card programs outside of North America. The majority of these programs are in the United Kingdom, Asia and the Asia-Pacific region. ** 8 * MasterCard Worldwide ** RPMG Purchasing Card Benchmarking Survey Results 2010.
Global purchasing card usage increasing Global trends Global companies see value in purchase card Expansion of card usage in payables Highly integrated virtual card solutions for targeted verticals Cost effective cross-border payment solutions 14.1% $2.2 trillion Projected commercial card purchase volume growth 2010-2015 Projected commercial card purchase volume by 2015 Of this $2.2 trillion 43% 57% Outside of the U.S. In the U.S. 9 Sources: Glenbrook Commercial Card Sizing August 2011, EIU Forecasts October 2011.
Purchasing card usage increases in N.A. Purchasing Card trends Spending & savings continues to rise in North America Spending Annual purchasing card spending in North America $196 billion $212 billion 2011 $247 billion 2012 $290 billion 2013 2014 $74 $44 billion Savings The cost savings that purchasing card use is generating per year in North America Cost savings per transaction in administrative costs when compared to the traditional purchase-order driven acquisition process 10 Data from RPMG Purchasing Card Benchmarking Survey Results 2012.
Why make the move the automated payables? Automated payables Cost savings drives electronic payment adoption Cost savings Improved cash forecasting Fraud control Reconcile efficiently Improved working capital Better supplier/ customer relations Barriers to adoption of electronic AP solutions The biggest barrier was the unwillingness of suppliers to accept electronic payments Shortage of IT resources for implementation Lack of standard format for remittance information Lack of integration between electronic payment and accounting systems 11 2013 AFP Electronic Payments Survey, November 2013
Driving automation
Payment strategy goals Objective: A cost effective way to do business globally Card is a key component to meeting overall payment objectives Reduce fixed costs in the payment cycle Optimize cash flow in support of working capital Corporate transparency and local control Process efficiencies 13 13
Examining options Solutions for every type of spend Type of spend Strategic international and domestic suppliers Supply Chain Finance (SCF) Benefit DPO extension/ COGS reduction Invoiced spend Virtual card & electronic ACH solutions DPO extension/ Financial incentive/ Dynamic discounting Non - invoiced spend/ lower dollar Purchasing Card Financial incentive/dpo Extension/reduced processing Costs/data consolidation Employee programs Travel Card U.S. and Global Control and data capture/ Financial incentive $ Working Capital Improvement $$$ 14 These solutions work effectively together to help improve working capital
Virtual Cards: The newest Card program The right solution at the right time Virtual card solution evolved from more traditional travel and purchasing card program usage Ongoing monitoring and best practices review Extending traditional one card and purchasing card to virtual card has dramatically increased purchase volume in just the last 2 years. Identify solutions to address local and regional differences Begin with a known product / internal need Position solutions with management Ensure Card is integrated throughout existing business processes Vendor recruitment Virtual card program success depends on your ability to recruit and retain vendors. Establish a vendor value proposition and ensure vendor recruitment is integrated into the sourcing process to ensure maximum program adoption and financial benefits received. 15
Going Global
Global Card programs visibility control optimization connectivity Single view into purchasing and T&E spend enterprise and worldwide Ability to implement consistent controls, common purchasing tools, and uniform policies around the globe Realize benefits associated with payments optimization globally Benefit from a multi-tiered client support team with global connectivity Key drivers expanding your Global Card program Robust capabilities Increased global acceptance for all employees and cardholders A market-specific card offering in each market A single data management and reporting tool for all global usage A solution provider that leads the market with clientcentric innovation Client-focused service and support A single point of contact for a consultative implementation with regional and global expertise Knowledgeable and specialized customer service for employees and client servicing for program administrators in local time zones Strategic account management support to ensure program optimization 17
Location, location, location Where do you do business? 18
Program insights/considerations Ways to promote global growth with regional differences Ongoing reporting and analysis at the global and regional levels Regular communications between program offices Integration w/ sourcing to identify new vendors Accountability to performance goals Card Security Central Travel Purchase Card Cultural/ regional nuances Chip and PIN Chip and Signature Magnetic Stripe Only Central travel accounts Business Travel Accounts Usage by region / country Data available Virtual card options Language expectations Local customs 19
Think globally, implement locally Project roadmap for deploying a multi-solution/multi-region EAP solution Design Implement Expand Identify potential vendor targets for Pcard v. epayables Vendor enrollment call campaign for epayables Ongoing vendor identification campaigns; sourcing integration Common framework for program development and deployment meets local needs and ensures global accountability. 20
Key decisions
Define success Get cards deployed and spend on cards time driven Capturing global spend and data to a centralized tool Process efficiency - moving low dollar non recurring spend to card Leveraging discounts with travel vendors globally Cost saving Realize higher card acceptance compared to current issuer Approach Global mandate use of card and mandated global expense policy across organization, unless government laws prohibit/risk Align with move to shared service centers Realize cost saving from card roll out in countries as a back office process improvement project to harmonize systems Alignment with organizational change 22
Measure success Monitoring local, regional, and global contributions Promote centralized reporting and regular communications Between local program management teams Metrics to consider Spend, Transaction Volume, Ave. Ticket, Monthly reporting minimum Performance by region / business office Consider other metrics such as vendor enrollment, # active vendor accounts Set a growth target for the portfolio spend, rebate, etc. 23 23
Best practice recommendations Consider your internal communication requirements from the outset Global data will be provided on card spend Allow sufficient time to migrate before serving notice to your existing provider Engage in an early and detailed dialogue with your project manager Engage regional stakeholders early and determine what input you need from them Ensure that company policies are enforced in regards to T&E and purchasing. Use the implementation as an opportunity to open the hood and identify best practice Assign a clear project lead to assist with comms and stakeholder management Focus on the overall benefits for the program not just on the rebate potential Let us help you to understand regional differences 24 24
Make your move
Summary Expert team Global project managers and local teams Dedicated and experienced Understand global markets Best practice guidance Best in class tools Global Reporting and Account Management Tool Across all markets Global and local reporting Integration with ERPs, expense management solution and HR systems Range of support materials Implementation guides Regional/country program guides Questionnaires for use with regions Cardholder communications Project plans GANTT charts Executive updates Activation reporting PA training and train the trainer materials Global Reporting Tool training and FAQs Payments guides Insurance and emergency guides 26 26
Partnering for success Q&A 27
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