Trinity Industries, Inc., with J.P. Morgan TEXPO 2017 Toss the Paper: Electronify and Simplify
Agenda Trinity Industries who we are Treasury Evolution of account structure The importance of having minimal accounts Cash Application three parts Invoicing front end Solution - middle Cash Application back end Trinity Industries Cash Application Process Benefits of digitizing cash application The Takeaway 2
Trinity Industries, Inc. Who We Are 3
Trinity Industries, Inc. Trinity Industries, Inc. is a diversified industrial company that owns complementary market leading businesses providing products and services to the energy, chemical, agriculture, transportation, and construction sectors Trinity operates through five business segments: Rail Group Railcar Leasing and Management Services Group ( Leasing ) Inland Barge Group Construction Products Group ( CPG ) Energy Equipment Group ( EEG ) External Revenue by Business Group (1) The Company serves its customers through manufacturing facilities located in the United States, Mexico, and Canada and had approximately 17,680 employees at the end of 2016 Total Revenue and EBITDA for FY 2016 was $4.59 billion and $1.03 billion, respectively All share and per share information has been retroactively adjusted to reflect the 2-for-1 stock split effective in June 2014. ($mm) (2) 4
EVOLUTION OF CORPORATE BANK RELATIONSHIPS 5
Evolution of Trinity s Banking Structure Year 2000 250+ Accounts at 100 Banks, for: Payables with 33 separate ERP environments Payroll Receivables with 10 lockboxes and 17 AR systems Relationship accounts Foreign entity/parent Work Comp, Benefits, Disaster, PAC, Other Local disbursement Local deposit Legal entity existence Tax strategy Acquisitions and ad hoc business ventures Year 2016 32 Accounts at 9 Banks Payables Payroll Receivables with 4 lockboxes Relationship MMDA investments Foreign entity/parent Work Comp, Benefits, Disaster, PAC Local disbursement for all U.S. plants Benefits of a smaller bank structure Signatories & KYC Where is the Cash Local accounts overdrawn Fraud controls Dormant accounts Timeliness & accuracy of reconciliation Escheatment Circumventing corporate controls Acquisition cash management Providing online access to users Business cycles
CASH APPLICATION THREE PARTS Part II: Solution Part I: Invoicing Part III: Cash Application 7
getting into the weeds getting into the details 8
Part I: Invoicing Front End How you invoice is as important as how you apply cash How many ERP s do you invoice from? Do you do consolidated invoicing? Do you have different addresses listed on your invoices?» Remit to versus corporate address Does your statement have a different address than your invoice? What is your contact information on your statements and invoices? 9
Invoice Example: Different Addresses 10
Invoice Example: Invoice Number 11
Invoice Example: Business Unit Name 12
Part II: Solution Middle Auto Association Data Enrichment Consolidation of all receipt types (Checks, ACH, Wire, Credit Card) Remote check deposit to lockbox for keying Search/Query fields Check payment amount and number Search includes all receipt types (Checks, ACH, Wire, Credit Card) 10 years on line retrievable record/image storage 13
Part III: Cash Application Back End How are you posting your lockbox/remittance detail? Checks mailed to the BU or Corporate office Checks mailed to your solution provider BAI file, CSV file or other file format from your solution provider How much of your cash application team s time is spent on Posting cash Working exceptions Chasing emails Are you able to post all of your different receipt types? Sub ledger General Ledger Credit Memos Prepayment On Account 14
Trinity Industries Cash Application Process JPMorgan s Receivables Edge product allows Trinity to capture all receipt types in the lockbox checks, wires, ACH, Virtual Remit and credit card receipts Credit managers are able to process current day cash receipts and remittance details across all receipt types versus working prior day cash receipts (chasing emails) Cash Application team extracts a CSV file at 8:00 PM CT from our JPMorgan Receivables Edge lockbox The CSV file is processed in approximately 45 minutes Continuous education weekly webinars with A/R and Credit Managers to discuss the cash application process 15
Auto Association Preload Remittance Data The credit manager received advance notice from the customer of payment with exact dollar amount and invoices and loaded this information into JPMorgan Auto Association Association occurs when the incoming payment from the customer is linked to invoice detail 16
Data Enrichment 17
Trinity Industries CSV Extract of Lockbox 18
Trinity Industries More4Apps Upload 19
Benefits of digitizing Cash Application Implementing changes from the prior slides and the JPMorgan Receivables Edge product, Trinity has been able to increase its auto posting rate from below 50% of checks to ~90% of all receipt types Scalable whether in an up or down cycle you should not feel an impact in your cash application process Saves Credit Managers between 2 3 hours of work per week (FTE) Improves Cash Forecasting Same day cash application reduces/eliminates the risk of double counting collected receipts Customer DSO Reduction / Increases Working Capital Convert vendors that pay by check to ACH or Credit Card Same day cash application improves visibility so when a tranche of debt is required we can better select the duration of the tranche 20
The Takeaway 1. Take time to look at all three parts of your cash application process 2. If you spend the time and get into the weeds you will find many areas of opportunity to improve your cash application process 3. Doing this will improve working capital, DSO, cash forecasting, reduce email traffic and reduce the credit managers and cash application team s work hours which can be repurposed to better uses 4. Continuous education have regularly scheduled meetings with A/R and Credit Managers to ensure a successful cash application process 5. Select the right solution make sure it is a turn key lockbox solution 21
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Today s Presenters Trinity Industries, Treasury Department Kevin Weber Sr. Treasury Manager Frank Woodley Treasury Manager J.P. Morgan Ron Victor Sr. Product Manager, Receivables 23