Classification: Internal Use

Overview of the Electronic Payables Landscape

September 18, 2019

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Welcome

Fifth Third Bank• Fifth Third Bancorp (“Fifth Third”) is a diversified financial services company headquartered in Cincinnati, Ohio, in 1858.

• Fifth Third has $142B in assets, we are the 17th Largest Bank in the US.

• We operate 4 Main businesses: Commercial Banking, Branch Banking, Consumer Lending, Wealth & Asset Management.

• We operate 1,154 full-service banking centers.

• Third Largest MasterCard issuer in the US.

Sherri StevensSherri has over 30 years of experience in the Commercial Payments industry of which the last 9 have been with Fifth Third

Bank.. She has a significant amount of expertise in payables processing and provides ongoing payables consultation

throughout the life of the relationship, along with best practices during the implementation phase.

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Agenda

• Payables Industry Overview & Trends

• Barriers to efficiency with today’s AP process

• The benefits of automation and evaluating the ROI

• Misconceptions of payables automation

• Look ahead: Emerging Market Trends

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Invoice Market Overview

15%

15%

34%

36%

Invoices received via webupload/supplier portal

Invoice received via EDI/XML

invoice received via email

Invoice received via paper

3%

9%

34%

54%

A combination of manual entry andautomation

Entered by Third Party Provider

Captured via software OCR & Staffchecks for errors

Manually entered by AP Staff

Invoice Receipt Method Invoice Entry Method

45% of companies get invoices approved through a manual email or paper processPayStream Advisors, 2018 Payable Insight Report, 2018

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Range: $3.00-$10.00 (Based on numerous studies)

– Check Volume– Labor Costs– Check & Envelope Supplies– Printing & Mailing Preparation– Lockbox Service Fees– Postage Fees– Bank Processing Fees– Check Reconciliation– Dealing With Lost Checks– Vendor Questions

Payments Market ViewPayment Method (Transaction)

70% of companies experience actual or attempted check fraud4

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1) Goldman Sachs: B2B how the next payments frontier will unleash small business, 20182) Aberdeen Group Survey 20163) Ardent Partners, State of B2B Payments: Emerging Business Value “Strategies for Success” , 2015 & RPMG Survey, EAP Study, 20154) 2019 AFP Payments Fraud and Control Survey Report

All Inclusive Check Cost 2&3

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Commercial Card IndustryExcludes consumer, small business, and fleet cards

$ Billion

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Value of Virtual Card

• Greatly reduces fraud risk

• Control over amounts and timing of payment

• Visibility into all card activity via online portals

Benefits of a Virtual Card

Generate financial incentives like traditional P-Card

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Payment FraudOrganizations that Experienced Actual or Attempted Fraud Attempted or Actual per Payment Type

43% of organizations suffered actual financial loses from fraud

Source: 2019 AFP Payments Fraud and Control Survey Report

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Source of Fraud

Source: 2019 AFP Payments Fraud and Control Survey Report

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Current State AP Process

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Current State AP ProcessManual Invoice

HandlingManual Approval

Process

Accting System Integration

Manual Payment Management

Disputes, Audits, Late Payments

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Manual vs Automated

16.6 Days to get an invoice approved in an average AP process (manual)

3.6 Days to get an invoice approved in an automated AP process

5x Improvement of invoice approval time when using an automated AP process

Impact on Invoice Processing 1

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1) Ardent Partners 2) Institute of Finance and Management3) Institute of Financial Management (IOFM) CFO/AP Research, 20164) Institute of Financial Management (IOFM) 2019

Only 23% of companies have a fully automated AP process from Invoice to Pay

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Classification: Internal Use 12

You Would Have More Time To….

Ensure your suppliers are paid promptly (and gain

discounts)

Work on taxes and prepare for audits

(you can provide an auditor read-only

access to your online portal)

Prepare your monthly and quarterly

financial reports (and with ease)

Enhance your internal accounting processes and best

practices

Gain better insight into what your

company is spending money on and why

Work on your company’s budget

4.11x Respondents engaged in AP automation can process 4.11x as many invoices as those with NO automation.1

Sources: 1. 2016 Reap the Benefits of Invoice Excellence With

AP Automation – Aberdeen Group

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ROI – Key Considerations

What to look out for

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Define your Focus

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ROI – Key ConsiderationsLook for these factors:• What will be the value in conversion of spend for the payments?

• Does the AP solution integrate with your accounting system?

• How will you control your coding and approval workflow process?

• What are the limits of user (Are their per-user license fees)?

• What are the post-implementation or annual costs?

• How will your solution be supported long-term?

Cost‐savings:• What is the estimated cost today to process an invoice?

• What is the estimated cost today to process a check?

• What is the time savings?

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Misconceptions of Payables Automation

Misconception #3 – All ePayment services are the same

Misconception #1 – I won’t have visibility and control over my payments and payment statuses

Misconception #2 – I have sensitive relationships with suppliers and a payment automation solution will hurt my relationships

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Misconceptions #1: Visibility & Control

Approve Payments from Anywhere

Experience Greater Visibility into Finances• Storage of payment transaction history for seven years

• Batch and transactional payment reporting

• Reconciliation reporting

• Real-time access to status of payment processes 24/7 and receive payment details for tracking, research, and reconciliation

• Available to control the approval queue anywhere there is internet service

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Misconception #2: Suppliers don’t want automated pymts

Suppliers that said they actually prefer being paid electronically (via ACH or VCC). Source: PYMNTS.com What Suppliers Want, 2016

Benefits of AP automation to suppliers

• Receive rich remittance information around each payment

• Improve cash flow with more immediate payments

• Eliminate check processing costs and reduce time spent on processing checks

• Eliminate inefficiencies caused by a paper-based process

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Misconceptions #3: All solutions are the sameExpert AP

• End-to-end procurement workflow and payments solution

• Centralized process for all inbound invoices

• Automated online approval workflow

• Fully managed supplier enablement and payment execution

• Single file payment initiation to streamline AP process

Paymode-X

• ACH payment network with secure vendor information and managed enrollment process

• Leveraging ACH channel to reduce transaction processing cost

• Improved reconciliation with detailed data reporting

• New dividend stream from network revenue share

Commercial Card

• Card channel solutions for traditional T&E spend and AP vendor spend

• Plastic and virtual card options enabling flexibility in card program growth

• Generate cash rebate by migrating AP spend to card channel

• Accelerate payments to vendors, while extending payables

Integrated Payables

• Single file payment solution combining Check, ACH and Wire initiation into a consolidated process flow

• Fully outsourced check production and delivery to reduce manual processing and AP costs associated with paper check

• Improved fraud risk mitigation with Positive Pay

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Misconceptions #3: All solutions are the same

The right solution is the one that best aligns with your strategic focus & capabilities

Classification: Internal Use 21

Banks are leveraging US BINS to effect more X border transactions

Virtual, tokenized card portfolios

CBAs and VCNs are gaining traction in Travel

Persistent disruption associated with safety and security solutions

Increasing need for APIs to power new mobile solutions

Converging supplier trade directory providers

Emerging Market Trends

There are also a number of emerging trends that are beginning to impact market conditions

Unknown effect of Real Time Payments and non-carded solutions

Seamless, end to end integration from Buyer AP systems to Supplier AR systems

Consumer bill pay rules are creating merchant strife

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Questions?

Thank you.

Member FDIC

Contact Info:Email: Sherri.Stevens@53.com