The Transition to Electronic Receivables A Paper Tiger? Minnesota AFP April 23, 2013

Transcription

1 The Transition to Electronic Receivables A Paper Tiger? Minnesota AFP April 23, 2013

2 Agenda Payment Trends Payments Automation Benefits and Barriers to Electronic Payments Checks and B2B Payments Evolution of Lockbox USPS Impacts Receivables Hub 1

3 A Paper Tiger? Something that seems as threatening as a tiger, but does not withstand the challenge (1) (1) wikipedia.org 2

4 Payments Trends No End In Sight for Paper Checks Checks still prevail as highlighted by recent Aite Group Study (1) 70% of monthly B2B payments still made by check 60% of participants received more than half of monthly B2B payments as checks Migration to electronics gaining momentum (1) Aite Group Survey (July 2012) Remittance Details: When and How They Arrive for U.S.-Based Companies 3

5 Payments Automation Benefits to electronic payments Cost Savings Converting checks to ACH: $2 - $5 savings per payment (1) Better Manage Cash Position Efficiencies Fraud Control Green 1) Aite Group Survey (July 2012) Remittance Details: When and How They Arrive for U.S.-Based Companies 4

6 Payments Automation Barriers to electronic payments Inability or unwillingness of trading partners to send or receive electronic payments Trading partners can t send or receive automated remittance information No standard format Resources required for implementation of electronic payments 5

7 Why Checks Still Rule 6

8 B2B Remittances U.S. companies send 15.5 billion remittances per month (1) 10% of remittances accompany payments and use standard format (1) 40% of remittances require manual intervention (1) Payer (versus the seller) typically makes decision regarding how remittance detail is sent (1) Companies more concerned about same-day payment posting than STP (1) LBX Online ACH Receivables Cards Wire (1) Aite Group Survey (July 2012) Remittance Details: When and How They Arrive for U.S.-Based Companies 7

9 Lockbox Evolution Wholesale Lockbox - more than just payments processing Imaging as the enabler Perfect Payment Information Data capture/data entry Online decisioning Account lookup Receivables matching/positive file Lockbox remote capture Present Payment Information and Images via optimal channel Repositions lockbox as a receivables management solution and key stepping stone for migration to electronics 8

10 Lockbox Online Decisioning Ability to manage payment exceptions online Accept or reject transactions identified by defined business rules Provide additional data Speeds exception resolution Increases automated hit rate Further decreases information float Faster deposit of funds resulting in improved cash flow 9

11 USPS Impacts Mail is slowing down Continued decrease in number of processing plants through 2014 Postal standards changes implemented in July day area: reduced from 12 hours to 6 hours of ground transportation (1) Average 3 hour (.10 mail days) increase in mail time reflected in Phoenix-Hecht October 2012 Survey (1) Some regions like Chicago, Atlanta, Dallas, Philadelphia and Boston showed little impact Phoenix-Hecht April 2013 Survey Will the trend continue or will 2013 be a period of stability? Increased value proposition for Lockbox Even more advantage for Lockbox over regular First Class Mail (1) Phoenix-Hecht Postal Survey

12 Receivables Factors Negatively Impacting Business Percentage of Survey Respondents Who Consider Factor to Have a Negative Impact on Their Business (n=80) Large or growing number of exceptions and returns Incomplete or inaccurate data about receivables 74% 73% Inefficient credit evaluation and management process Large number of channels through which payments are received Inconsistent payments handling due to multiple payment types 56% 56% 54% Lack of real-time remittance reporting 50% Existing infrastructure does not support electronic payments well 48% Lack of timeliness of deposits 44% Lack of budget to spend on receivables solutions 29% Source: Aite Group survey of U.S.-based large corporate senior receivables and treasury managers, February - April

13 Receivables Hub International Lockbox Domestic & International Credit Card Lockbox Remote Deposit Wire ACH / EDI RPPS International ACH & Wire Central Processing Hub EBPP Online Decisioning A/R Matching Positive File 1) Perfect Payment Information Name & Address DB Account Lookup Human Review Online Archive Remittance File 2) Present Payment Information & Images Image Direct Returned Item Mgmt Research / Resolution Bad Debt Management Inventory Management 3) Create Incremental Value Benchmarking / Trend Reporting Payment Channel Optimization 12

14 Receivables Hub Evolution vs Revolution Manage cash position with a consolidated view to all Receivables payment types Single A/R data feed electronic and paper payments Lockbox ACH Wire Cards RDC Same tools for every payment type and source Standard and centralized reporting for all payment types Payment analytics Long-term solution to grow with trends in payments 13

15 Receivables Landscape Electronic payments migration will continue Straightforward transactions go electronic Complex transactions still paper Receivables Hubs will simplify the transition 14

16 Questions? 15

17 Contact Information Tressa M. Masterson Senior Product Manager Global Treasury Management BMO Harris Bank 16

18 Disclaimer BMO Financial Group is a brand name representing Bank of Montreal and its subsidiaries and affiliates. Banking deposit and loan products and services are provided by BMO Harris Bank N.A. and are subject to bank and credit approval. BMO Harris Bank is a trade name used by BMO Harris Bank N.A. Member FDIC. 17