state of washington annual forum...agency duns name annual rebate total 2016 king county...

State of WashingtonAnnual Forum

Cheryl Mielnicki, Relationship Manager, Public SectorPaul Shanahan, Head of Relationship Mgmt. Large Market Public SectorKim Spiroff, Relationship Manager, Government BankingJennifer Lawson, Team Lead, Government Banking NW Region

October 10, 2017

2U.S. BANK |

Conference Agenda

• 8:00-8:30 Registration

• 8:30-8-:45 Introductions : State of WA Attendees, U.S. Bank Team

State Program review and contract updates Veronica Field

• 8:45-9:00 Performance Review /Rebate/Top 20 for 2016: Cheryl Mielnicki, US Bank

• 9:00-9:30 Program Optimization: Tonya Peterson, U.S. Bank

• 9:30-10:00 Payment Plus: Leslie Massey, U.S. Bank

• 10:00-10:15 Break

• 10:15-11:00 Fraud/Best Practices and trends: Nate Johnson, U.S. Bank

• 11:00-11:45 Visa Card Industry Updates: John Krausen, Visa

• 11:45-1:00 Lunch Break

• 1:00-1:30 Access Online Enhancements/Roadmap: Patrick Howard, US Bank

• 1:30-2:00 Access Online Top 10 Tips/Tricks , Adam J Smith, US Bank

• 2:00-4:00 Round Table Discussions

Program Review

4U.S. BANK |

Performance Review

• Calendar year 2016– Volume– Year over year growth (2015-2016)– Trending for 2017

• Rebates

5U.S. BANK |

Year Over Year Performance

2015 2016Total Spend $ 442,811,739 $ 477,410,054 # of Transactions 1,316,475 1,410,179Avg Trans Size 336 339Avg Spend/Acct 16,289 15,704Avg Trans/Month 109,706 117,515Active Accounts 13,844 14,593Total Accounts 27,184 30,401File Turn Days 24 24Write Offs 2,559 9,384

Fraud 157,481 116,038

6U.S. BANK |

2016 Rebate

• The Rebate for all agencies totaling over $7.6MM with over 480 participating agencies/poli-subs

• Tracking to exceed that rebate for 2017• Year over year for the first 6 months shows a 13%

increase in volume• The Year Over Year Rebate shows an increase of 9% over

2015• Close to 30% of participants are receiving full Prompt Pay

Incentive rebate of 45 basis points

7U.S. BANK |

Top 20 Agencies/Poli-subs for 2016

Agency Duns NameAnnual Rebate Total

2016King County [Washington] $ 984,566.50 Washington State Department of Transportation $ 795,564.54 Washington Department of Social & Health Services $ 618,364.10 Tacoma School District No. 10 $ 372,845.05 Tacoma (City of) $ 312,307.34 Washington State Department of Corrections $ 207,892.95 Washington Military Department $ 207,782.95 Washington Department of Fish and Wildlife $ 168,620.82 Spokane County, WA $ 156,131.23 Washington State Parks and Recreation Commission $ 145,156.83 Washington State Department of Enterprise Services $ 119,497.61 Auburn (City of) $ 107,334.46 City of Spokane $ 103,790.87 Olympia School District No. 111 $ 94,439.86 Washington State Department of Health $ 92,515.65 North Thurston Public Schools $ 90,401.91 Bellevue (City of) [WA] $ 87,674.59 Washington State Patrol $ 87,474.25 Auburn School District #408 $ 84,712.79 Puyallup School District No. 003 $ 81,932.54

U.S. BANK CUSTOMER CONFIDENTIAL

US Bank Program Optimization TeamTonya Peterson

State of Washington – Annual ForumOctober 10, 2017

Program Optimization

9U.S. BANK CUSTOMER CONFIDENTIAL | U.S. BANK |

• Program optimization is a consultative service we offer our clients to help them maximize the benefits of their commercial card program

• Using industry benchmarks and best practices, we analyze a client’s accounts payable practices and recommend areas for streamlining

• On average we see that clients who undertake program optimization grow their program and its related benefits at a significantly higher rate than their peers

• Opportunities for program optimization exist in three key areas:– Capturing new card accepting suppliers– Maximizing process cost savings– Expanding to new spend categories such as payables

Executive Summary


Program Optimization Explained

Optimal Knowledge

Understand client card performance compared

to peers

Identify and select suppliers that support

procure-to-pay initiatives

Recommend an optimal payment mix based on

type of expenditure

Optimal Control

Improve spend visibility and cash forecasting

Rationalize supplier base and negotiate

better pricing / payment terms

Reduce the risk, costs and paper associated with check payments

Optimal Profitability

Improve working capital

Reduce transaction costs

Increase rebate opportunities

U.S. Bank Confidential. For internal reference only

Employs qualitative and quantitative assessment, best practices, and industry research to analyze your payment practices


Program Optimization is a Collaborative ProcessThis consultative approach seeks to find win-win solutions that maximize the value to our clients on a continuous basis

Program Optimization

Process

Identify Potential Opportunity

Validate Opportunity

Execute Plan and Measure Benefits

Develop Plan to Capture Opportunity

• Analyze client-specific data

• Review findings with client

• Prioritize based on value and ease of capture

• Develop detailed plans to address opportunities

• Utilize benchmark data

• Leverage industry best practices

• Partner with client to execute against identified plan

• Measure results of optimization effort


We Begin with an Understanding of Client GoalsUS Bank will work with you to understand your agencies’ goals and objectives and align them against your peer group best practices and industry trends

Understand client needs and objectives

What does the AP process look like now?

What pain points exist?

What are the agency’s goals for streamlining?


We Use Industry Benchmarking and Best PracticesUsing research from leading industry experts we compare an individual agency’s results to best practice benchmarks of those of a similar size and industry

• Provide benchmarking of merchant category spend against 21 issuers

McKinsey Consulting

• Analyze the commercial card industry and identify best practices and market trends

RPMG

• Membership organization that provides research and education on industry practices

NAPCP

• Data analytics researchers who provide an accounts payable benchmark study

Aberdeen


Notes:• Color indicates if the supplier is either specifically a U.S. Bank Virtual Pay acceptor or a Visa Product Acceptor generally• The size of the bubble indicates the total volume paid to that specific supplier

We Help Agencies Improve Efficiency and Reduce Costs by Capturing New Card Accepting SuppliersYour suppliers are analyzed against the Visa, MC and our proprietary merchant database to identify opportunities

Review suppliers with larger spend volumes to maximize benefit


We Offer a Virtual Pay Solution to Enable the Capture of New Spend Categories While Improving ReconciliationImprove payment automation and reconciliation by adopting payment solutions based on invoice spend and supplier

Only thepayment method

changes

1. Automate the process and reduce costs

2. Improve reconciliation3. Obtain greater data

Invoice Receipt

Financial System

CodingApproval

Payment


What an NAPCP Study of the Public Sector Found when Comparing Card Payments to Checks

Source: Cost Savings: Purchasing Cards vs. Traditional Purchase Orders in the Government Sector – NAPCP June 2016

NAPCP conducted a 2016 accounts payable cost analyses for four public sector entitiesParticipants• City of Tacoma, WA

• City of Arvada, CO

• Harford County Public School System, Harford County MD

• State of Washington Department of Transportation

Methodology1. Identify average cost of personnel who conduct the

process, including benefits but not overtime

2. Map and compare the process for purchase orders, Purchasing Cards and, in one case, the process for card payments tied to an accounts payable system

3. Estimate the time to complete each step

4. Compare total costs for each process

Purchasing cards continue to result in cost savings in comparison to other forms of payment


What the Industry Experts Say About the Benefits of Card ProgramsRPMG quantified the following bottom line benefits to card usage in their purchasing card benchmark survey results

Source: 2014 Purchasing Card Benchmark Survey RPMG Research

Purchasing cards generated over $38 billion in cost

savings per year in North America.

Purchasing card use resulted in a 70% (8 day) reduction in time elapse from order placement to

receipt of goods. Fortune 500-Size public corporations report an annual cost savings of $15 million as attributed

to card use.An ongoing annual realization of procurement

efficiencies resulting in a 1.6% bottom line improvement.


What Our Clients are Saying About US“We were taking a hard look at our costs per transaction on the accounts payable side. We wanted to cut back on the number of paper checks we issue due to their associated expense and risks.” - Sarah Toepke, Controller

Net financial benefit increased by 800% due to the program’s automated payment efficiency, visibility, control and rebates over three years.

100% of invoices are audited automatically to eliminate payment errors.

“Your credit is everything in this industry, and when you’re paying people quickly they want to haul your freight.”

“Every purchase contained the data needed for full visibility.”

$4MM in savings in 2016 as a result of audit and payment processes.

“Our reporting is accurate, easy to obtain and available in real-time. We can easily track progress, identify areas of opportunity and ultimately drive results.”

- Benjamin Fricke, Secured Logistics

- The Amelia Project / Signature Flight Support

- Accounts Payable Team, Fortune 1000 Manufacturer

17 stops, >24,000 nautical miles, >$50,000 in payments

“Payment Plus eliminated the need to contact suppliers regarding lost or outstanding checks. Our suppliers get paid faster and Intermountain can capture additional rebates with no additional costs. Suppliers can now expect payment on a certain date and time.”

Eliminated over 7,200 checks, exceeded supplier penetration 7 months earlier than plan

- Denis Smith, AVP and Corporate Controller


U.S. Bank ResourcesAgency Resources

Program Administrator

Program Optimization Plan LeadsDrive overall engagement with and execution of plan

Payment Specialist

Relationship Manager

Subject Matter Experts• Provide insights into plan

development• Execute against specified

elements of plan

Accounts Payable

Technology

Procurement

Treasury

Supplier Engagement Manager

Payment Data Consultant

Implementation Specialist

Supplier Enablement Support

U.S. Bank’s AP Connector partner provides a very cost effective technology solution to execute a virtual card program

What our commitment is to helping your agency realize payment benefitsOur team of experts provide execution support and ease agency resource concerns to ensure you achieve results


How You Get Started

Contact your U.S. Bank CPS RM and begin working with our Program Optimization team to maximize your U.S. Bank Commercial Card program


Questions?

22U.S. BANK CONFIDENTIAL |

U.S. Bank Payment PlusRedefining payments for today’s business

October 10, 2017

Leslie Massey, APSCWestern Region Sales Manager


Discussion topics

• Payment trends• What is a virtual payment solution?• U.S. Bank Payment Plus• Supplier Enrollment• How to get started


Payment trends


Payables trends

2015 RPMG Electronic Accounts Payable Benchmark Survey

e-Payables and Virtual Accounts“Electronification” of

the AP process

Cost of Acceptance

Shift in focus to supplier value

proposition

Spending Growth

Increase in monthly EAP spending

33%

$


Virtual account adoption trends

2015 RPMG Electronic Accounts Payable Benchmark Survey

Overall spend with virtual payments

60%

$101 billion2018

$73 billion2015

By 2021

Programs with virtual payments

90%

Annual spend ($ bill)Virtual PaymentsNorth America

$110 billion2019

Overall annual spendincrease of 50%


A/P Top Priorities

22%

24%

26%

28%

40%

41%

Better link P2P processes & systems

Improve collaboration with Procurement

Improve collaboration with Suppliers

Improve A/P reporting and analytics

Improve visibility into invoice & payment data

Reduce processing costs

Ardent Partners ePayables 2016: Eyes on the Prize


Check fraud risk by the numbers

• 51% of B2B payments made by check. 2016 AFP Electronic Payments Survey

• $10 billion in estimated annual losses from check fraud and counterfeiting. The National Check Fraud Center

• 62% of surveyed organizations experienced payment fraud. 77% of that fraud involved checks, representing 45% of financial losses. 2015 AFP Payment Fraud Survey

• Check fraud losses to grow by 2.5% annually.An American Banker magazine estimate


Strong fraud prevention and protection

Built-in controls to prevent fraud• Unique account numbers

– Coded for specific supplier– Authorized for set amount

• Single-use feature• MCC blocks• Account number expiration

Liability protection• Associations provide chargeback rights• Same protection as “card not present” transactions


What is avirtual payment solution?


What is a virtual payment solution?

• Unique 16-digit account number• Assigned to specific payment or

supplier• Electronically generated at time

of payment• Dovetails with existing procure-

to-pay processes

Virtual Payment

virtual card

cardless accounts

ghost accounts

single-use accounts

electronic accounts payable

payables automation


Why virtual payment?Expand the benefits of commercial card payments to a larger tier of spend.

Check/Wire/ACH

Virtual Payments

Commercial Cards

• Office equipment• Professional services• COGS

• Travel• MRO• Office supplies


U.S. Bank Payment Plus


Benefits for your agency

• Improve control • Simplify reconciliation• Reduce risk• Enhance working capital• Reduce processing costs• Gain superior visibility and reporting


Payment Plus features

• Real-time, 24/7 web-based solution • Highly secure• Seamless integration• Comprehensive supplier enrollment


Enhance A/P value and contribution

Transform your A/P contribution from a back office function to a valued revenue source.

Virtual payment strengthens

your contribution by elevating the

payment process

Meaningful Revenue

Maximize Staff

ProductivityMeasurable

Value

37PROPRIETARY & CONFIDENTIAL — U.S. BANK |

V I R T U A L P A Y M E N T S

37

P A Y M E N T R E Q U E S T

R E S P O N S E P A Y M E N T R E C E I P T

M O N I T O R

• Client’s system sends a virtual card payment instruction file/API to U.S. Bank

• U.S. Bank opens accounts and sets credit limits

• Emails payment notification to the organization being paid (suppliers/vendors)

• Supplier receives payment notification email containing virtual account number and remittance information

• Supplier processes the payment

• Transaction posts to U.S. Bank payment management system and auto matches to client’s payment request

• Client reviews transactions using online reporting and/or file extract

H IGH LEVEL PROCESS FLOW


Supplier benefits

• Faster / guaranteed payments

• Decreased paper and costs

• Improved reconciliation

• Reduced labor-intensive processes

• Reduced risk


Supplier Enrollment

40PROPRIETARY & CONFIDENTIAL — U.S. BANK |

Supplier EnrollmentU.S. Bank owns and manages the process from beginning to end

• Data Collection• Communication

CampaignPreparation

• Supplier Outreach

• Activate Suppliers

Execute

• Track Progress of Vendors Enrolled

• Track Dollars of Spend Enabled

Reporting

Assessment

Program Design

Recommend Strategy

IT/Portal Configuration

ProgramExpansion

Training

Supplier Setup

U.S. Bank Supplier

Enrollment Team methodology


Supplier Enablement ReportingSupplier Enablement Summary:

Total Contracted Suppliers

Enrolled Suppliers

% of Targeted Suppliers

Contracted Pool of Suppliers 284 157 55%

Enablement Status # Suppliers % SuppliersTransaction

Count % Trans Count $ Spend % $ SpendTotal Targeted Pool 284 100% - 130,499,060$ Enabled Suppliers 129 45% - - 36,523,089$ 28%Enabled Suppliers - Manual Pymts 28 10% - - 15,792,075$ 12%Does Not Qualify / Not Card Accepting 0 0% - - -$ 0%Removed / On Hold 1 0% - - 85,770$ 0%Recruiting 12 4% - - 4,081,005$ 3%Verbal Commitment 0 0% - - -$ 0%Drop-Out 0 0% - - -$ 0%Buyer Action 114 40% - - 74,017,122$ 57%

Buyer Action Summary:

Need More Information 15 13%Declined to Participate 84 74%No Business with Buyer 0 0%Question for Buyer 1 1%Unresponsive 14 12%Suppliers on Buyer Action 114

41


Establish strong participation policies– Mandated positioning encouraged – Provide incentives like accelerated payment timing, “Preferred”

supplier status– Set target dates

Comprehensive and consistent messaging – Obtain sponsorship and align internal stakeholders– Promote awareness and compliance– Thorough communication through multiple channels

Allocate adequate time and resources– Specific resources to support campaign activities– Incorporate into sourcing process

Best Practice Summary


Next steps


How to get started?

• AP vendor file to analyze– Recommended AP file volume 50MM+

• Share analysis results with the client• Increase credit line• Add Payment Plus functionality to Access Online site• Set timeline to begin campaign

• Questions?

44


U.S. Bank Payment Plus

Questions?

©2017 U.S. Bank National Association. All trademarks are the property of their respective owners. CPS 3992 (12/15) MMWR-79928

Fraud Updates

Nate Johnson, Fraud Management


Agenda

• Fraud Landscape• Fraud tools • Tips to Protect Your Program

48U.S. BANK PROPRIETARY AND CONFIDENTIAL |

Fraud Landscape

49U.S. BANK |

Why should you be concerned about fraud?

Source: 2017 AFP Payments Fraud and Control Survey

Cyberattacks, data phishing and data breaches have become an almost daily occurrence

74% of organizations were victims of payments fraud in 2016

With the implementation of EMV card technology, fraud has migrated elsewhere—especially to card-not-present (CNP) transactions

Experts believe that CNP fraud will soon outpace card-present fraud in the U.S. by a three-to-one margin

50U.S. BANK |

Support for an evolving payments landscape

Ensuring payment security however the cardholder wishes to pay

DigitallElectronicAnalog

Embossed Magneticstripe

EMV chip

Card/device

Offlineauthorizations Real-time

authorizationsAdvancedrisk scoring

Mobile

Network

***1 PINSignature Risk-based,

behavioral,biometrics

Authentication

51U.S. BANK |

Prevalent fraud trends

Merchant compromiseMagnetic stripe information is intercepted as it is communicated from merchant to issuer

Account number generatorOnline programs generate valid credit and debit card numbers according to the algorithm used by major card associations

Counterfeit/skimmingReading or skimming devices copy information held in a card’s magnetic stripe

52U.S. BANK |

Account take-over fraudAn emerging trend

•Data compromises and personally identifiable information (PII) breaches continue

•Data from merchant data and PII breaches combined in an attempt to take over an account

53U.S. BANK |

How U.S. Bank defends against fraud

Near time rules• Card guard

Real-time rules• ADS I/II

Fraud risk score models• Falcon risk score• Visa Advanced Authorization Risk score• Mastercard Expert Monitoring System

score


U.S. Bank Fraud Initiatives

55U.S. BANK |

Fraud Alerts

U.S. Bank: ABC Corp $10,000 on 08/25/15 Reply VALID or FRAUD to resolve or call 800.523.9078. Msg & data rates may apply

U.S. Bank: Your card has been blocked. Please call U.S. Bank immediately at 800.523.9078. Msg & data rates may apply. Reply HELP for help

U.S. Bank: We will update our records with your confirmation. Your card is in working order. Msg&data rates may apply. Reply HELP for help

56U.S. BANK |

Travel Tag for authorizations

How it works

• Cardholder travel itineraries stored

• Transactions analyzed geographically

• If transaction near travel destination, Travel Authorization Tag populated

• Information used to authorize transaction

57U.S. BANK |

Mass compromise automation Handle seamlessly with less customer disruption

58U.S. BANK |

Visa Consumer Authentication Service

* For illustrative purposes only; results may vary depending on issuer authentication rule performance and strategyVisa Confidential

59U.S. BANK |

Service and support—our commitment to innovation

Location based fraud score enhancements

One time passcode

Machine learning functionality

Cardholder verification and security


Tips to prevent fraud

61U.S. BANK |

Authorization and decline managementTracking authorizations and declines

• Fraud• MCC code blocks• Credit Limits

62U.S. BANK |

Program administrator best practices

• Keep records current and mind how card data is stored and destroyed

• Manage charging privileges and review spending frequently

• Schedule fraud/transaction reports

• Educate cardholders and communicate policies frequently

• Report unauthorized activity immediately

63U.S. BANK |

Cardholder best practices

• Sign cards immediately• Reconcile charges frequently• Report questionable charges or

lost or stolen cards immediately

• Keep address information current with account information on file

• Protect the account number at all times

• Sign up for fraud alerts

64U.S. BANK |

Questions?

©2017 U.S. Bank. All trademarks are the property of their respective owners.CR-14005290 (R-07/17)

Break for luncheak for lunch

66U.S. BANK | PROPRIETARY AND CONFIDENTIAL |

Access Online RoadmapPatrick HowardVP, Bankcard Product Management

67U.S. BANK | PROPRIETARY AND CONFIDENTIAL |

Access Online Roadmap

• Continued strategic investment in technology platform and supporting technologies

• Focus on system enhancements in key areas– Core functionality, data/reporting/analytics & mobile

• Further modernization of the system– Improved user experience– Responsive web design– Re-engineer antiquated processes– Extend mobile capabilities

• Keeping up and staying ahead of technology and trends– Partnering with industry leading innovation teams

• Strong commitment to system and data security

state of washington annual forum...agency duns name annual rebate total 2016 king county...

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