Integrating Payment Channels: Integrated Receivables. March 24, 2015

Transcription

1 Integrating Payment Channels: Integrated Receivables March 24, 2015

2 Agenda Introduction Integrated Receivables Definition Defining the Need and Market Analysis Defining the Solution Integrated Receivables Business Drivers and Value Proposition Deployment Options Summary Q&A WACHA Conference WAUSAU Financial Systems 2015

3 Presenters Sam Golbach WAUSAU Financial Systems SVP Solution Management Integrated Receivables for Financial Institutions 16 years of receivables experience WACHA Conference WAUSAU Financial Systems 2015

4 Integrated Receivables Definition WACHA Conference WAUSAU Financial Systems 2015

5 What is Integrated Receivables? WACHA Conference WAUSAU Financial Systems 2015

6 Integrated Receivables Definition 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 WACHA Conference WAUSAU Financial Systems 2015

7 Defining the Solution Integrated Receivables solutions in the market today include four key components, though few banks offer robust functionality across all four. Payment Consolidation Reporting & Analysis Automated Invoice Matching & Posting Storage Integrated Receivables Source: Treasury Strategies Inc WACHA Conference WAUSAU Financial Systems 2015

8 Non-Integrated Receivables WACHA Conference WAUSAU Financial Systems 2015

9 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 WACHA Conference WAUSAU Financial Systems 2015

10 Defining the Need and Market Analysis WACHA Conference WAUSAU Financial Systems 2015

11 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 WACHA Conference WAUSAU Financial Systems 2015

12 In a Survey of 43 Banks, Revenue Growth is Banks Highest TMS Priority Revenue growth was a #1 priority among all banks Top TMS Priorities Larger banks (assets over $100 billion) were less focused on cost reduction and placed higher priority on regulatory compliance than smaller banks (less than $100 billion assets) Increase fee revenue Cost reduction Improve regulatory compliance (e.g., FFIEC, AML) Improve risk management 58% 25% 47% 50% 18% 42% 29% 94% Banks >$100b Banks <$100b 0% 20% 40% 60% 80%100% Top 2-box (%) Source: Celent survey of US Banks, September 2014, n=43 Q: What is your institution's top commercial/treasury management priority for the coming year? WACHA Conference WAUSAU Financial Systems 2015

13 Most Banks Cite Accounts Receivables as the Most Important TMS Products Most important in terms of delivering the revenue growth objective (4 or 5 on a 5-point scale) Strategic TMS Product Line Importance Accounts Receivable Services 90% Online banking / Information reporting 79% Fraud prevention (Positive Pay, ACH Debit Block, etc.) 69% Accounts Payable Services 59% Liquidity and investment management 52% Trade finance, financial supply chain, etc. 38% 0% 50% 100% Top 2-box Importance (%) Source: Celent survey of US Banks, September 2014, n=43 Q: How important are each of the following treasury management product areas in delivering your top priorities in the previous question? WACHA Conference WAUSAU Financial Systems 2015

14 Integrated Receivables Management Solutions - Key to Ensure Future Revenue Growth 92% of large banks rated integrated receivables management most important to future revenue growth (4 or 5 on a 5-point scale) Cash related services much less so Receivables Product Importance to Future Revenue Integrated Receivables Management 53% 92% Lockbox Healthcare Revenue Cycle Management Remote Lockbox Capture Electronic Receivables - a.k.a. electronic lockbox Mobile RDC for business customers Desktop RDC for business customers 75% 65% 67% 59% 55% 65% 58% 59% 50% 56% 50% 53% Banks >$100b Banks <$100b Remote Cash Capture 29% 55% Cash Vault Serivces 18% 33% 0% 50% 100% Top 2-box Importance (%) Source: Celent survey of US Banks, September 2014, n=43 Q: Within receivables, which products will be most important in terms of future revenue growth? WACHA Conference WAUSAU Financial Systems 2015

15 Banks Have a Dramatically Different Vision 25% of small banks see integrated receivables simply as consolidated receivables reporting Another 13% embrace electronic lockbox as a future vision Larger banks have a more robust vision for integrated receivables Vision/Understanding of Integrated Receivables Solution that extracts, translates and loads payment and remittance files from mutliple payment and remittance channels to provide a consolidated file for importing into client ERP systems. Solution that provides bank operations and commercial clients a single portal to view, analyze, post and report on consolidated receivables, regardless of payment method or remittance delivery method used. Same as above, plus a single workflow to resolve exceptions in order to maximize STP rates and achieve maximum same-day cash posting - while delivering a single file with remittance information from all sources to automate posting. 0% 0% 13% 25% 27% 44% Banks >$100b Banks <$100b Same as above, but includes rich data visualization and analytics to identify and correct recurring problems and identify opportunities that can improve client's DSO. 19% 73% 0% 20% 40% 60% 80% Client usage (%) Source: Celent survey of US Banks, September 2014, n=43 Q: Definitions of Integrated Receivables vary. Choose the definition below that best matches your understanding or vision WACHA Conference WAUSAU Financial Systems 2015

16 And embrace a very different client value proposition Smaller banks tend to embrace integrated receivables for its ability to improve operations efficiency Larger banks embrace a more robust client value proposition: Increasing same-day posting rates Lowering days sales outstanding (DSO) Client Value Proposition - What's Most Important? Saves client time and effort by having a consolidated cash posting file from all payment and remittance streams. Increases same-day posting rates by making it faster and easier for clients to resolve valid exceptions 25% 36% 55% 75% Banks >$100b Banks <$100b Lowers client DSO and improves access to working capital through analytics and reporting. 13% 64% 0% 20% 40% 60% 80% 100% Most important (%) Source: Celent survey of US Banks, September 2014, n=43 Q: When thinking about Integrated Receivables, which client value proposition is most compelling in your opinion? WACHA Conference WAUSAU Financial Systems 2015

17 Yet, Share a Similar View of Solution Capabilities Consolidated receivables reporting is the obvious starting point table stakes Support for all payment and invoice receipt mechanisms, not just check and ACH Client portal attributes are important Information security should be a given Reporting and analytics surprisingly less important than most basic capabilities Perceived Importance of Integrated Receivables Solution Capabilities Consolidated receivables reporting Support for all pmt. & invoice receipt mechanisms Consolidate rcvbles. streams into single posting file Easily configurable client portal with single sign-on Cleanly integrates into multiple ERP systems Robust information security AR matching capability (a.k.a. invoice matching) Native long-term data and image archive Automates reconcilement through business rules and data enrichment Configurable alerts Independent of, but integrated with legacy lockbox platform(s) if applicable Support for mobile approvals 59% 55% 69% 69% 66% 83% 79% 90% 90% 89% 86% 97% Provide rich information reporting, data visualization, mining and analytics Bank agnostic for clients having multiple banking relationships 45% 52% 0% 20% 40% 60% 80% 100% Top 2-box Importance (%) Source: Celent survey of US Banks, September 2014, n=43 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? In other words, which capabilities would offer your customers the most compelling value? WACHA Conference WAUSAU Financial Systems 2015

18 Banks associate integrated receivables affinity with larger businesses and B2B payments Generally viewed as most compelling for large firms conducting B2B transactions But not exclusively so Even excluding SMB, integrated receivables represents a significant market opportunity Perceived Integrated Receivables Market Affinity 100% 96% 79% 79% 80% 60% 57% 54% Resp (%) 39% 40% 32% 32% 20% 0% Large Corporate Middle Market Commercial Small Business Wholesale B2B Retail C2B Source: Celent survey of US Banks, September 2014, n=43 Q: In which market segments will Integrated Receivables Management both resonate and be viably delivered in your opinion? WACHA Conference WAUSAU Financial Systems 2015

19 Receivables In Motion Summary Receivables are in motion. Change is afoot in many of the top-100 banks. This change is driven by: The changing B2B payments mix Growing non-bank competition Receivables product portfolios will be much more capable in the near future. In particular: Mobile RDC for commercial clients Remote lockbox capture Integrated receivables Smaller banks show signs of adopting integrated receivables, but have a different vision Source: Celent survey of US Banks, September 2014, n= WACHA Conference WAUSAU Financial Systems 2015

20 An IFO White Paper: E-Payments and Remittance Study WAUSAU/IFO Survey of 47 corporates Survey respondents Source: IFO E-Payments and Remittance Study, September 2014, n= WACHA Conference WAUSAU Financial Systems 2015

21 An IFO White Paper: E-Payments and Remittance Study More than 94 percent of respondents reported that they require manual effort to find and reassociate the payment and data. Source: IFO E-Payments and Remittance Study, September 2014, n= WACHA Conference WAUSAU Financial Systems 2015

22 An IFO White Paper: E-Payments and Remittance Study Source: IFO E-Payments and Remittance Study, September 2014, n= WACHA Conference WAUSAU Financial Systems 2015

23 Defining the Solution WACHA Conference WAUSAU Financial Systems 2015

24 Key Solution Needs Ability to aggregate all receivables payments, regardless of payment method 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 WACHA Conference WAUSAU Financial Systems 2015

25 What Should You Seek in a Solution? An Open Platform for All Payment Types Electronic ACH, WIRE, CC, etc Retail Whole-tail Wholesale Innovation with Key Technology Efficiencies Designed to Take Advantage of Early Extraction of Information Electronic and paper Provides common exceptions management Designed for Automated Outputs files, reporting Designed for Your Environment Scalable, Flexible and Proven Supports remote and centralized import and extraction Service architecture Supports in-house, co-sourced our outsourced models WACHA Conference WAUSAU Financial Systems 2015

26 Sample Integrated Receivables Views WACHA Conference WAUSAU Financial Systems 2015

27 Integrated Receivables Business Drivers and Value Prop WACHA Conference WAUSAU Financial Systems 2015

28 Receivables Hub 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 WACHA Conference WAUSAU Financial Systems 2015

29 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 WACHA Conference WAUSAU Financial Systems 2015

30 Corporate Benefits of a Receivables Hub* Maximize efficiency and help improve your working capital No matter what form of payment your customers choose An integrated solutions can help you receive funds more efficiently and provide you with better insight into your cash position. And when you know where you stand, you can make informed investment and borrowing decisions while we help you mitigate the negative influence of revenue cycles. You'll benefit from: Optimized working capital Accelerated cash flow Improved access to customer payment information Reduced processing costs Increased funds availability * Source: Fifth Third Bank Web Site WACHA Conference WAUSAU Financial Systems 2015

31 Integrated Receivables Deployment Options WACHA Conference WAUSAU Financial Systems 2015

32 What Should You Seek in a Solution? An Open Platform for All Payment Types Electronic ACH, WIRE, CC, etc Retail Whole-tail Wholesale Innovation with Key Technology Efficiencies Designed to Take Advantage of Early Extraction of Information Electronic and paper Provides common exceptions management Designed for Automated Outputs files, reporting Designed for Your Environment Scalable, Flexible and Proven Supports remote and centralized import and extraction Service architecture Supports in-house, co-sourced our outsourced models WACHA Conference WAUSAU Financial Systems 2015

33 Summary WACHA Conference WAUSAU Financial Systems 2015

34 What Should You Seek in a Solution? 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 WACHA Conference WAUSAU Financial Systems 2015

35 Questions? WACHA Conference WAUSAU Financial Systems 2015