working capital optimization = automation · same day ach (sda) •in may 2015, nacha membership...
TRANSCRIPT
Working Capital
Optimization =
Automation
Efficient. Visible. Savings.
John Melvin
April 26, 2016
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Current environment
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Drivers of change
Source: 1. http://www.internetworldstats.com/stats14.htm#north
2. Consumers and Mobile Financial Services 2015
3. 33 Social Media Facts and Statistics You Should Know in 2015
4. FedEx Corporation Q1 Fiscal 2015 Statistics
Technology Visibility Speed
• 87.4% of U.S.
population has
Internet access1
• 87% of U.S. adult
population has a
mobile phone
and 71% are
smartphones2
• 3.65 billion mobile
users have access to
the Internet via
smartphones and
tablets3
• Instant services and
chat apps account for
three of the top five
social platforms
• Approximately 500
million tweets and
70 million photos/
videos sent via
Instagram each day
• In first quarter 2015,
FedEx shipped
1.7 million packages
overnight4
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MORE THAN
68% of controllers
identified
improving cash
flow as the
most critical
finance and
administrative
priority.
75% of businesses
lack automated
processes that
fully optimize
systems
around
managing
supplier
payments
effectively.
Labor costs
represent a
median of
60% of
the expense of
accounts
payable
processing.
59% of
businesses say
they lack the
systems and
automation
necessary to
facilitate timely
payments and
are forced to
rely on sub-
optimal manual
processes.
Common issues
Source: Accounts Payable and Procure to Pay Network White Paper – Feb 2016
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Payment trends
• Cash remains most common consumer payment instrument2
Source: 1. The 2013 Federal Reserve Payments Study
2. Federal Reserve Bank of San Francisco
0
15
30
45
60
2000 2006 2012
Checks (paid)
ACH
Credit Card
Debit Card
Vo
lum
e in
Bill
ions
U.S. Non-Cash Payment Volume1
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Check automation opportunities
81% 74%
57% 50%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
2004 2007 2010 2013
Source: 2013 Association of Financial Professionals Electronic Payments Survey Report
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Faster payments
Effect of real-time payments (decline in system volume)
• $10-$40 billion savings from improved efficiency in accounts
receivable and accounts payable
Source: Federal Reserve Study Says The U.S. Needs Faster Payments, Forbes (Nov. 2014)
33% 11% 7%
Checks ACH Wires
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The Fed
Source: American Banker, September 2014
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Top challenges
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Manual processing
• Your goal should be to limit
paperwork, reduce exceptions
and move your employees to
focus on performing more
strategic, value-added work.
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Change management
“I want you to find a bold and
innovative way to do everything
the same way it’s been done
for 25 years.”
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Data management
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Strategy and vision
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Product innovations
“Faster Payments”
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Same Day ACH (SDA)
• In May 2015, NACHA
membership approved
Same Day ACH Rules ballot
– 71 million ACH
payments are made
each day
– Most settle on a
next business day
No Change to existing 1-
and 2-day processing
2
new processing windows
All
financial institutions required to
accept
$ Low fees
5 p.m. funds must be available
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Visa Original Credit Transaction/MasterCard Send
Enables businesses and consumers to send funds to a consumer’s bank
account, using the debit card number associated with that account
Ubiquitous
Can send funds to virtually
all U.S. debit cards
regardless of brand
Fast
Funds typically
available within seconds
(30 minute SLA)
Safe
Leverages the safety of the
debit networks
Simple
Only need debit card number
• 24/7
access to
funds
• Domestic
and cross
border
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clearXchange
• Customers of network FIs have the ability to send money to anyone
with a bank account within the U.S. knowing just their email or cell
phone number
– A Network FI can link an email or cell phone number (e.g., alias) registered
by one of their customers to that customer’s individual account
– Customers’ banking details are not shared with clearXchange or
any other FI
• Offers two processing times:
– Standard
• Payment posted to recipient's account no later than three business days
– Real-time
• Payment posted to recipient's account within five minutes
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Straight-through processed payments
Payment
Remittance detail
Auto post
• No need to re-key
• Reduces manual work
• Creates efficiency
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0% 10% 20% 30% 40%
>90%
70-89%
50-69%
<50%
Corporations
ST
P P
aym
en
ts
>90%
70-89%
50-69%
<50%
• What percentage of your receivables are processed as straight-through transactions?
Source: Aite Group, LLC, “Insights Into Corporate Receivables” August 2010
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Evolution of card payments
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Virtual payment account options
Ghost accounts
Dynamic adjustment accounts
Single-use accounts
Push payment or STP
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Process improvement
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End-to-end process discussion
Working Capital
Payables Receivables
Sell
Invoice
Payment
Deposit
Post/Recon
Source
Purchase
Invoice
Receive
Pay
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Partnering to move to highest efficiency
Check
Card
ACH
STP
eDocument
Will your financial partner help you move
to the most efficient tools over time?
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Your partner should listen to your
• culture
• goals
• challenges
• opportunities
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What should you ask for?
YOUR SOLUTION
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Seeing the bigger picture
Traditional payment improvement
Electronic payment improvement
Process improvement
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Do you see the forest through the trees?
Are you familiar with
the available options?
Are you innovating strategies to
impact working capital?
Is your view of your payables
processes holistic?
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Benefits of analyzing your working capital cycle
1. Examining all aspects of
cash flow is key
2. Identify opportunities
for efficiency and working
capital advantages
3. Recommendations
should fit culture
and desired objectives
30 U.S. BANK |
Thank you!
John D. Melvin, CTP
Vice President, Working Capital Consultant
Global Treasury Management
U.S. Bank
816-289-4544
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It does not constitute advice and is issued without regard to any particular objective or the financial situation of any particular individual. These views are subject to change at any
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