Working Capital Optimization = Automation · Same Day ACH (SDA) •In May 2015, NACHA membership approved Same Day ACH Rules ballot – 71 million ACH payments are made each day –

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

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Thank you!

John D. Melvin, CTP

Vice President, Working Capital Consultant

Global Treasury Management

U.S. Bank

816-289-4544

[email protected]

This information represents the opinion of U.S. Bank and is not intended to serve as a recommendation or solicitation for the purchase or sale of any particular product or service.

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

time based upon market or other conditions and are current as of the date indicated on these materials. Products and services offered may be subject to credit approval.

Eligibility requirements, other conditions, and fees may apply. Deposit products offered by U.S. Bank National Association. Member FDIC © 2015, 2016 U.S. Bank National

Association. MMWR-85259 (3/16)