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Electronic Payments: Increasing Volume Through Supplier Enablement

Electronic Payments: Increasing Volume Through Supplier Enablement. Dean M. Leavitt, Chairman & CEO Boost Payment Solutions, LLC. The B2B Landscape. 1) 2010 Federal Reserve Retail Payments Study

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Electronic Payments: Increasing Volume Through Supplier Enablement

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  1. Electronic Payments: Increasing Volume Through Supplier Enablement Dean M. Leavitt, Chairman & CEO Boost Payment Solutions, LLC

  2. The B2B Landscape 1) 2010 Federal Reserve Retail Payments Study 2) 2009 funds transfer data (wire data) processed by Fedwire and CHIPS derived from multiple sources. • U.S. B2B Spend: $109.5 trillion • U.S. B2B # Payments: 13.4 billion • U.S. B2B Paper-based Spend: $21 trillion • U.S. B2B # Paper-based Payments: 7.5 billion • U.S. B2B ACH/Wire Spend: $88.1 trillion • U.S. B2B # ACH Payments: 2.7 billion

  3. After 60+ Years… B2B Opportunity Dwarfs B2C U.S. B2C Card Payments (Mature and Saturated) U.S. B2B Paper Payments (Virtually Untapped) $21T $2.6T _______________________________________________ Source B2B - HSBC Global Commercial Products, Nilson Report, US Government records

  4. Market Overview: Changes Are Afoot Source: First Annapolis Navigator, RPMG study – June 2011 Electronic Payments are on the Rise But… Supplier Enablement is Still a Challenge!

  5. An Evolving B2B Technology Landscape Transaction Size Spend per Supplier Buyer Initiated Payments Single Use “V-Cards” “Ghost” Cards “Walking Plastic” Technological Advancement

  6. The History of Supplier Enablement is Littered with Failure

  7. Why? Because the DNA of Acquiring Industry is “B2C”

  8. Technology & Solutions • POS Terminals • Time-consuming Settlement Procedures • Paper Statements

  9. Sales & Marketing Strategies • Merchant Centric • Retail Store Orientation • Untrained Sales Organizations • Selling “Rates” to Store Managers

  10. Risk Evaluation One Time Retail Store – Consumer Encounter Merchant Has Access to Card Number Multiple Transaction Capabilities • Face-to-Face • Online/MOTO

  11. Chargebacks Based on Chance Encounter Between Consumer Cardholder and Retailer

  12. Interchange Rates $67 Average Ticket

  13. What’s Changed

  14. Technology & Solutions • Buyer-Initiated Payment Programs • PCI Compliant B2B Gateways • EIPP/EIP Vendors • EDI Records • AP/AR Systems Automation

  15. Sales & Marketing Strategies • Buyer Centric • Corporate Orientation • Trained and Dedicated Sales Force • Selling to CFO/CPO/CIOs • Expanded Use of P-cards

  16. Risk Evaluation • Based on Existing Vendor - Vendee Relationship

  17. Chargebacks • Global Card Brands Adjusting Rules

  18. Interchange Rates $500,000+ Ticket

  19. It’s Time to Leave Old Technologies Behind

  20. And It’s All About Supplier Enablement! Pre- Campaign Wrap-up Develop Game Plan & Analytics Recap & “Clean-up” Enhanced Data & Progress Reports Supplier Outreach Educate & Communicate Supplier Enablement Reporting Acquiring

  21. Value Proposition For Purchasers • Rebates • Elimination of check writing and delivery costs • Increased efficiencies across all procurement/AP activities • Enable superior reporting • Easy accounting for adjustments • Ability to combine mission-critical data with payments • Compliance with “Green” strategy

  22. Value Proposition For Suppliers • Retain or enhance relationship with customers • Earlier payment reduces DSO and frees up working capital • Elimination of check receipt and processing costs • Increased efficiencies across AR activities • Complete integration of payments into AR system • EDI 820 or 823 • BAI or BAI 2 • CTX • Ability to combine mission-critical data with payments • Compliance with “Green” strategy

  23. The Perfect Candidate for a Migration

  24. The “Nuts & Bolts” of a Successful Campaign

  25. Buyer Commitment Is Key

  26. Best Practices for a Successful Campaign • Secure Buy-In at Every Level of Client • Establish Milestones & Set Expectations • Mandate Acceptance Whenever Possible • Adjust Payment Terms (“Carrots & Sticks”) • Well Thought-out Communication Strategies and Materials • Educate Suppliers – Dispel Myths and Misinformation • Detailed Progress Reports (Call an “Audible”if Needed) • P-card Acceptance “Baked” into New Contracts, Renewals, RFPs…

  27. Best Practices for a Successful Campaign Conversion Rate Implementation of Best Practices

  28. Carrots & Sticks & • Mandate Whenever Possible • Reward Supplier for Participation • Penalize Supplier for Non-participation • Combination = Successful Campaign

  29. Pre-Campaign “Must Dos” • Segment Supplier List • “Scrub” Supplier List • Financial Tools to Determine Impact to Client & Suppliers • Establish Communication Strategy • Develop Communication Message(s) • Establish Time Frames and Milestones and Reports

  30. Financial Analytics • Understand Client’s AP Culture • Apply Filters based on Client’s Goals • Identify Outliers and “Ripe Fruit” • Project Financial Win or Loss • Client/Buyer • Suppliers • Make Recommendations

  31. Communicating the Message

  32. Multifaceted Approach • Good Old Fashioned Letter • Face-to-Face Meetings • Outbound Telephone • Inbound Telephone • Webinars • Online Set-up

  33. A True Mandate “ ” “ ” We are directed under the Debt Collection Improvement Act of 1996, Section 3720C, to change to electronic vendor payments. As a result, future payments are to be made by an electronic credit card process. It is our intention to begin the process of reevaluating our procurement activities with respect to those suppliers that refuse to accept our procurement card immediately.

  34. Getting Suppliers On-Board • Carefully Study Your Prospective Supplier • Anticipate Objections • Always Engage the Decision Maker (Scrubbing Key!!) • Know Exactly What Their Costs Will Be • Understand Their Current and Future Options • Teach Them that Card Acceptance is Not a Penalty • Make Signing Up Easy for Them • Follow-up!!!

  35. Reports, Reports, Reports…

  36. Critical Tool • Lack of Reports = Biggest Complaint From Stakeholders • Spot Trends Before they Occur • Keep Client and Issuer Up To Speed • Analyze Success of Campaign • Ability to Call an “Audible”

  37. Campaign Progress Reports

  38. Post-Campaign Wrap-Up • Analyze Data on Campaign To Date • Develop Communication Strategy for Non-Participants • Develop Communication Materials and Implement “Final” Outreach to Non-Participants • Recap Campaign results with Purchaser and Issuing Bank • But…

  39. A Successful Campaign Never Really Ends… • Establish Strategy and Procedures for New Suppliers • Alert Purchaser of Non-Participating Suppliers’ Acceptance From Other Purchasers • Advise Purchaser of Changes in e-Payables Marketplace

  40. Q & A

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