michigan community college association conference bank of america’s treasury management solutions:...
TRANSCRIPT
Michigan Community College Association Conference
Bank of America’s Treasury Management Solutions: An Introduction to Purchase Card and ePayables
November 7th, 2013
Agenda
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• Introductions
• MiDeal Overview
• Purchasing Card Overview
• Works Technology
• Payment Automation ePayables
• Next Steps
• Questions
Introductions
William MungaiVice President, Client ManagerPublic Sector BankingPhone: 617.434.9679Email: [email protected]
Client Management Client Team
Christopher BrinVice President, Treasury Solutions OfficerPublic Sector BankingPhone: 757.884.3938Email: [email protected]
Nancy CournayaVice President, Senior Card Account ManagerCard Account Management - CentralPhone: 312-992-6295Email: [email protected]
Client
Joseph (Joe) KissSenior Vice President, Senior Client ManagerPublic Sector BankingPhone: 989.964.7821Email: [email protected]
Kenneth (Ken) HarrounVice President, Treasury Solutions OfficerPublic Sector BankingPhone: 248.631.0550Email: [email protected]
Extended Team
Mi Deal Overview: State of Michigan Procurement Card Services
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State of Michigan Procurement Card Services (Mi Deal)
Bank of America is the provider for the State of Michigan Electronic Payment Card Services – Statewide Procurement Card Contract since 2008. Under the Contract, Bank of America provides purchasing card and ePayables services to municipalities and government bodies within the State as long as they are a member State of Michigan Mi Deal program and meet the program volume requirements.
• Purchasing Card participant volume requirement of $1,000,000 annually
A current listing of approved program members is available at: http://www.michigan.gov/mideal.
Benefits of Mi Deal / State of Michigan
• The need to go through the RFP process is eliminated• Easy enrollment• No program or cardholder fees • Networking and Best Practices• Assigned Card Account Manager• Assigned Card Account Specialist for servicing needs • Works application to manage your card program• Rebate rate tier determined by adding state and local government bodies
Purchasing Card Overview: Replacing Check Payments
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Purchasing Card: Replacing Check Payments with a Card Solution
• Many of our government clients have embraced the electronic payment process because it provides a unique opportunity to reduce expenses and increase efficiencies. More importantly, it minimizes the risk of fraud and increases transparencies for auditors and constituents alike without changing the accounts payable processes currently in place.
• Purchasing cards are the quickest and easiest way to eliminate low dollar/low value transactions
• Purchasing Cards fit perfectly into most organization’s AP process and can drive out paper in a short amount of time
• The average organization has the potential to more than double the number of transactions under $2,500 that are paid by p-card and increase fourfold the number of transactions from $2,500-$10,000.
• Penetration in P-card spending payments has increased for office equipment, travel, computers, maintenance/repair/operations, telecommunications, printing & duplicating, media/advertising and transportation/delivery services.
• P Card spend increased nationwide 17.6% from 2007-2009
Purchasing Card: Controls and Fraud Protection
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Controls:• Manage cards in real time – at the push of a button within Works, increase/decrease funds on card or disable cards in real time
• Dispute transactions
• Ability to offer zero-dollar cards and declining balance cards for optimized control
• Enforce corporate and individual spending policies
• Block merchants using Merchant Category Codes (MCC)
• Impose single transaction limits, daily/weekly/monthly spending limits
Fraud Prevention:Bank of America has instituted a number of procedures to decrease exposure to fraud including:
•Card PIN Activation •Card Expiration Date •Card Verification Value •Physical Card Features
Bank of America was recently recognized by Javelin (an independent research and study entity) for the 8th straight year as ‘Best in Class’ for Fraud Detection/Prevention, Servicing, and Claims Resolutions in 2013 for our card programs.
•The survey was done across the top 25 card issuers•Bank of America scored a 79 which was 8 points ahead of our closest competitor CitiBank•The average score across all participants was 55
Works Technology: Card Management and Online Reporting at your fingertips
Purchasing Card Online Reporting Tool: Works®
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The most innovative web-based electronic payment solutions systems in the industry
Data can easily be integrated into accounts payable systems with 40+ standard reports including receipt imaging & management
− Custom reporting by spend by vendor, department, project, grant, GL code, hierarchy, etc.
− Automated 1099 reporting
Automated Reconciliation − General Ledger (GL) allocation and export for GL
upload
Tools to mitigate fraud:− Real-time card controls including card issuance and
suspension− Optional pre-purchase approval process− Declining balance card issuance− Merchant Category Code (MCC) restrictions and
transaction limits to purchasing authority
Works® accommodates unique cardholder, manager, auditor, accountant and administrator permissions
Two years of online data retention
Card maintenanc
e and Active Card
Controls
Easy integration into your
ERP system
Spend monitoring
for encumbered
funds and discretionar
y/incremental
funds
Online hierarchy
management
Pre-approval and post-approval
workflows
Real-time manipulation of credit availability
Works®
Payment Automation:Replacing Checks with the Bank of America Vendor Card
solution, ePayables
Bank of America Merrill Lynch was the first to market with the solution and is the largest issuer of ePayables programs, processing more than $12 billion and 2.1 million
transactions in 2012.
ePayables is a complementary solution to the Purchasing card designed to further increase payment transformation from check to a card solution. In order to qualify we
can perform a vendor analysis for you and provide a sample proforma of expected enrollment. The minimum requirement to participate is to have an expected vendor
enrollment figure of $2 million based off of the vendor analysis.
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ePayables: How does the Service Work
Client ERP/AP System
Invoice received
and approved
to pay
Works processes
AP file
Works funds card
ePay– vendor charges
card
Push pay – payment pushed to vendor’s merchant account Card
processor
• Replace 30-40% of non-payroll AP check volume• Turns a costly check into a “free” electronic payment• Eliminates per-item banking fees and processing costs
• Optimizes your efficiency and working capital• Extends float opportunity and provides cash payout incentives• Requires no changes to the upfront accounts payable process
• Enhances transaction risk management
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Electronic vs. paper payment processes at a glance
Record of payment
Payment action
Remittance advice
Vendor cash received
Client paid cash
Confirmation of payment
Check run file
Print on check per supplier ID
Check stub with invoice line-item detail
Check deposited; funds clear in 5-7 days
Cash withdrawn upon check clearing
Positive pay file
Card run file
Dynamically fund one card number per supplier ID
Email notification with invoice line-item detail
Card transaction authorized; cash transferred in 2-3 business days
Bank statement paid in 30-45 days after transaction posts
Works® exports file with posted card transaction details
Payment method Check ePayables Payments
The Value of ePayables
BUYER BENEFITS
Reduce costs and efficiencies▪ Make AP payments with no
transaction fees▪ Incentive cash payouts based on
spend▪ Increases float for improved cash
flowImprove transaction risk management▪ Helps control card payments by only
authorizing pre-approved payment amounts
▪ Reduced risk of fraud through elimination of checks and cards issued with $0 credit limits
▪ Improve buying power by offering your vendors a faster, more reliable payment option
Further payment automation strategy▪ Replaces costly paper payment with
low- cost electronic payments▪ Provides vendor enrollment support▪ More than 75,000 vendors enrolled to
accept ePayables on approved invoices
SUPPLIER BENEFITS
Control and costs▪ Receive electronic payments without
need to give bank information to customers
▪ Reduced payment receipt processing cost by eliminating paper payments
▪ Uses existing card technologies, processes and protections
Relationship▪ Strengthens relationship with buyer
while reducing the costs and risks associated with paper payments
Efficiency and float▪ Remittance data transmitted
electronically with payment for easy application to account
▪ Funds made available on card at time of remittance (remittance can be via email or fax)
▪ Improve Days Sales Outstanding (DSO)
Starting a Purchasing Card or ePayables program with Bank of America
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Next Steps
Your Bank of America client team are here to help. We can help you understand what is available in the
market and what fits best for your organization.
• Please contact your client manager or treasury solutions officer to setup a follow up discussion.
• Review the State of Michigan contract to see how it can help your organization earn a rebate for utilizing a Purchasing Card / ePayables program.
• Create a customized financial benefit analysis for your organization to see the value of converting to an electronic card solution.
• We are pleased to offer a one on one demonstration of our proprietary online reporting tool and card management application, Works™ for your organization.
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Questions
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