Forte Financial Blog

Wells Fargo Enhances Corporate Mobile Offering to Include Wires and Positive Pay

My previous post on Wells Fargo's mobile banking for corporates was very popular, so I imagine Forte Blog readers will be interested in these recent updates to WF's CEO Mobile service:

Wires: CEO Mobile users now can initiate and approve wires from wherever they are and are no longer tied to their PC in the office. Corporate treasurers rejoice!

Positive Pay: Image positive pay gives mobile customers the ability to view exceptions, including the check image -- an important protection against fraud -- when deciding to pay or reject check exceptions.

In addition, a number of other features are being piloted:

• Manage and decision potentially fraudulent ACH transactions
• View even more balance and reporting information
• and company administrators can perform tasks such as resetting user's passwords.

Procure-to-Pay Best Practices (VISA & Deloitte)

VISA Commercial partnered with Deloitte Consulting to conduct the 2008 Global Procure-to-Pay and Commercial Card Best Practices Study. This is an refresh of earlier research.

Previously identified and still relevant best practices include:

• Implementing an automated end-to-end financial process;
• Using supplier relationship management tools;
• Incorporating full data integration to provide enhanced reporting and spend analytics;
• Adopting control and compliance measures.

I was pleased to see that the new best practices identified in this year's study emphasize change leadership:

• Creating visibility and mainstreaming commercial payment initiatives;
• Socializing initiatives with corporate executives and staff;
• Utilizing cross-functional teams with centralized management;
• Implementing full systems integration with enterprise applications;
• Committing to ongoing program optimization.

Read more:

2008 Global Procure-to-Pay and Commercial Card Best Practices Study (Executive Summary)

Citi to Whitelabel Ariba EIPP Solution

From Bank Technology News:

Ariba, a spend management solutions firm, has agreed to a first-ever private-label agreement for its invoice and payments technology with Citi’s Global Transaction Services unit. Citi plans to integrate Ariba with its own e-payment and supplier finance offerings. Those programs include Citi’s recently launched purchase card program and connectivity to major supplier finance services in the payments industry.

From Check to Electronic Payments: The B2B Outlook [NACHA Payments]

[This is just one of my series of posts from the NACHA Payments 2008 conference in Las Vegas.]

From Check to Electronic Payments: The B2B Outlook [NACHA Payments]

Arlene S. Chapman CTP
Senior Consultant, Technical Services, Association for Financial Professionals
Daniel W. Ellecamp CCM
Financial Consultant, California State Automobile Association
Rue Jenkins
Assistant Treasurer, Costco Wholesale Corporation
Claudia Swendseid
Senior Vice President, Federal Reserve Bank of Minneapolis

Synopsis from Conference Program

The U.S. payments system is evolving rapidly from paper to electronic payments. How is this change affecting business-to-business (B2B) payments usage, which has long favored paper checks? Industry experts from the Association For Financial Professionals (AFP) and the Federal Reserve (FR) highlight results from recent research on the current state of B2B payments and implications for the future. How much progress has been made since the FR estimated B2B checks in 2001 and the AFP surveyed B2B payments practices of its members in 2004? Adding a "real world" perspective, two corporate practitioners discuss their B2B payment practices and rationales, and offer their "color commentary" on the AFP and Fed research. Panelists cover a range of issues including: (1) key barriers to greater use of electronic B2B payments; (2) integrating the payment with other financial processes; and (3) the outlook for B2B electronic payments adoption. Panelists also offer suggestions for action to accelerate the migration of B2B checks to electronic alternatives.

My Observations & Comments

This was another very good session - with seasoned corporates sharing their views alongside industry experts from AFP and the Fed. I won't attempt to capture all of the statistics as they are readily available from the Federal Reserve, previous presentations,  and AFP. Over all, B2B transactions make up 12% of non-cash transactions (10.9 billion) and 84% of the value ($156 Trillion). From 2000 to 2006 the number of check B2B payments declined somewhat, but not as quickly as consumer checks have declined. Cards are the fastest growing B2B electronic payments method, increasing at over 25% /year. ACH is also growing steadily, although not all B2B ACH transactions include addenda (remittance data):

Wires remain relatively flat in volume, although with the addition of remittance data in 2010 there may be a surge in usage.

Costco

Costco is gradually shifting its payments from check to ACH. Their challenge is that not all vendors have the ability to receive remittance data electronically and post it to their systems automatically. Costco makes electronic payments either by ACH or by Purchase Card. Pcards are very easy for Costco but challenging for the supplier as they have to pay interchange.

Jenkins from Costco likened corporate payment processing to a production environment in factory, just like building  a car on an assembly line. There are many opportunities to decrease waste and drive up efficiency. Electronic payments are very efficient, have less fraud, do not get lost (checks get lost), and the remittance does not get lost (like in a paper environment). In comparison, dealing with paper is cumbersome.

Costco runs checks daily today, but has considered moving to a model where ACH payments are run daily and check runs are limited to 2-3 days per week. Jenkins suggests that payment method be incorporated into the procurement purchasing and contracting discussion as each vendor contract is negotiated (or renegotiated).

At Costco Treasury advocates for electronic payment (either sending or receiving) and advises other departments (AR, AP, etc.) as they weigh alternatives.

Over time, as the Federal Reserve closes processing sites and image clearing continues to increase, the float benefit of checks will diminish, supporting the transition to electronic payment methods.

Cal State AAA

Over the last 5-6 years AAA has made an effort to transition toward more electronic payments. They tried a one card solution, but it didn't work as well for the purchasing department. Now they use both a T&E card and a purchase card. They also send ACH transactions without addenda in many cases, but follow up wiht remittance information however the supplier wants to receive it (email, fax, etc.). They also use a ghost card via Peoplesoft.

Ellecamp from AAA observed that it is much easier to send electronic payments than receive them. They have put little attention toward AR so far.

AAA tries to be as flexible as possible in sending remittance data to its suppliers "we give them every opportunity so they cannot say no." Ellecamp explained that by implementing ACH payment with key suppliers (glass replacement, car rental, body shops) AAA saves $100,000 a month and significantly streamlined its payables process. 

When asked how he would feel if suppliers mandated sending electronic payments to the AAA AP department, Ellecamp responded "I'd love that!"

Ellecamp observes that electronic payments are "not sexy, not exciting" and that he often has to cajole other departments to change their processes. But the savings are hard dollars that continue indefinitely (for years to come) and that's appealing.  He also advocates getting an advocate to support the cause, e.g the CFO. [I advocate marshalling the support of senior leadership, too. See more here.]

Both Costco and AAA agreed that better products from banks, particularly those that support small and mid-sized businesses will help ease the transition to electronic B2B payments.

>> Return to index of my posts from NACHA Payments 2008

Corporate Mobile Banking: Separating Hype from Reality [NACHA Payments]

[This is just one of my series of posts from the NACHA Payments 2008 conference in Las Vegas.]

Corporate Mobile Banking: Separating Hype from Reality [NACHA Payments]

Jacob Jegher
Senior Analyst, Celent

Amy L. Johnson
Vice President, Wells Fargo

Synopsis from Conference Program

Mobile banking is generating a wave of excitement in the North American marketplace. While much of the emphasis is on the retail market, corporate customers stand to benefit tremendously from this nascent channel. This session provides an overview, based on independent research from Celent, of the latest corporate mobile banking technology trends. The state of mobile cash management solutions is examined through a different lens, by distinguishing hype from reality. This session provides a detailed picture of what future mobile cash management solutions will look like, as well as descriptions of key features and functionalities that will attract users to this blossoming technology. Finally, it will help banks to ensure that their corporate mobile customers are provided with the proper security and authentication mechanisms while maintaining ease of use. A case study is presented by a pioneering institution in the mobile banking service for business sector, including an overview of its solution, descriptions of functionalities, lessons learned and business benefits.

My Observations & Comments

This was one of the best sessions I attended - an ideal balance of research/industry observations from Celent and real-world experience from Wells Fargo.

Celent

Eighty one percent of corporate executives are linked to their office through a mobile device. However, in the US 40% of business people are connecting to their corporate email using a personal device (an iPhone or other smart phone that they themselves purchased). This poses security challenges for corporate IT and those that seek to promote mobile banking and payments for corporates.

Mobile is proven to be effective in driving productivity, enabling remote work, and connecting disbursed teams. According to Celent four trends will drive the adoption of mobile banking and payments for corporates: 1) the evolution of full featured devices, 2) "BlackBerry mania", 3) Faster networks that provide a better user experience, and 4) the increasing prevalence of data plans.

Yet banks are slow to adopt new technologies, and mobile banking is no exception. Many banks are cautious about mobile banking in general, let alone offering mobile services for corporate customers. Security is obviously a major concern. Moreover, most vendors focused on corporate payment solutions do not feature mobile solutions and most mobile vendors are focused on consumer solutions. And mobile solutions are still immature. It is not clear whether text messaging, mobile browser, or device applications will be the dominant interface (or some combination). Celent predicts that mobile applications will be dominant, despite the challenge of developing multiple versions for each phone model and wireless carrier. And, thus far, corporates are not clamoring for mobile banking.

Demand for mobile banking:

Wells Fargo is the first bank to offer mobile banking to its corporate customers. Celent expects that seven additional banks will launch corporate mobile banking this year, and 6 more next year.

Wells Fargo

Wells Fargo believes that mobile banking and payments are inevitable and intends to lead in the mobile space. Their customers demand it and they have a mobile product road map to guide their progress. They are relying on text messaging and mobile browser for now, avoiding mobile applications (they are less enthused about applications than Celent is).

Mobile is particularly valuable for corporate clients as the need for dual controls and fraud prevention increases the number of approval steps for day-to-day payment activities. As the workforce becomes busier and virtual it is increasingly likely that corporate finance managers are away from their office (if only in a meeting down the hall) when they need to approve a payment or resolve a discrepancy/inquiry.

Wells Fargo's corporate mobile approach targets four types of transactions:

"Snack sized" functions (a Gartner term) - discrete tasks that take less than 5 minutes. The don't require enough time for it to make sense to boot up your laptop. You can do them while you stand in line, in between meetings, or waiting for your flight.

Time sensitive tasks - deadlines looming, expiring rates, or payments due.

Dual Control tasks - those that require two or more approvers, increasing the odds that one or more approver is away from their desk.

Fraud detection - utilize mobile to alert customers that there may be a real time fraud risk. Send just enough information to make a decision, or at least give manager an alert to phone the bank and learn more.

Wells Fargo is taking  an incremental approach, rolling out "a little something every quarter" and involving its customers to get continuous feedback. The solutions are very simple and elegant. For example, if you are approving a wire using the web browser on your mobile phone and have a question about it, the phone number of the person in your company is included in the record so you can click to dial that person directly and ask a question. When you conclude the phone call, the browser session resumes so that you can seamlessly approve the transaction. 

Lessons learned:

1) Involve customer service early. Train them to handle phone calls.

2) Do not expect high usage at first. It is a big shift for the customer. Use patterns vary from daily to occasionally.

3) Get your SMS short codes lined up early (lots of lead time necessary)

4) Be prepared to be nimble

>> Return to index of my posts from NACHA Payments 2008

The Return of The XML All-Star Team [NACHA Payments]

[This is just one of my series of posts from the NACHA Payments 2008 conference in Las Vegas.]

The Return of The XML All-Star Team [NACHA Payments]

Susan Colles CPA, CBA
Senior Vice President, Bank of America
Robert Blair CCM
Vice President, JPMorgan Chase
Susan Boeri
Manager, Treasury Services, GE Corporate Treasury
Fred Laing, II AAP, CCM
President, Upper Midwest ACH Association
Leonard Schwartz
Director, ABN AMRO Bank

Synopsis from Conference Program

ISO 20022 XML messages for corporations and banks are now beginning to be exchanged on B2B interfaces on a daily basis. Corporations continue to seek automated solutions in order to increase their efficiencies and transparency of transaction processing. Banks have collaborated so that a consistent usage is applied to the message content, and they have worked with ERP vendors to validate the data support within the business applications. Discover the initiatives being advocated by corporations and the benefits they have realized with their ISO XML integration. Hear how U.S. clearing systems, including the ACH Network, are incorporating these standards into their processing environment.

My Observations & Comments

A survey by GTNews and ABN AMRO reveals that the needs of Accounts Receivable are still inadequately addressed by today's payments environment. Eighty-five percent of respondents feel that legacy EDI standards are not helping enough. 44% believe that XML is a promising solution for delivering dollars and data together. Standards are the only means to achieve straight-through-processing (STP) of payments and remittance data. 

The goal of ISO 20022 ("twenty-oh-twenty-two") is to facilitate transactions, not become the business process. It is syntax neutral (doesn't have to be XML, can adapt as technology evolves) and addresses a wide variety of financial business processes including payments, FX, trade, invoicing (under development), and securities. Thus far the payments transactions address credit, debit, and bank to corporate reporting. 

Will NACHA adopt XML for ACH remittance data? There is a great opportunity to leverage XML to include remittance data with ACH transactions. XML is less expensive to develop, easier to use, and easier to understand. NACHA has developed a business case for incorporating XML and formed a rules workgroup. A request for comment will be distributed this summer and all interested parties are encouraged to comment. The idea is not to replace the existing ACH formats, but rather to incorporate XML in the addenda records (there was much discussion on this point during the session). It doesn't make sense to reinvent the wheel, so NACHA is looking at the ISO 20022 version of XML, particularly as it is gaining traction as a global standard. 

Other uses of ISO 20022 In March 2009 NACHA will implement the International ACH Transaction (IAT Standard Entry Class Code) in order to address OFAC screening of transactions that involve parties outside the United States. The format of this transaction is based on ISO 20022. The Federal Reserve just announced that remittance data will be added to wires in either STP 820 (simplified EDI) or ISO 20022 format starting in late 2010. In addition, many banks are utilizing XML to drive the middleware layer between their various front end channels and back end legacy transaction processing systems.

File Mapping - SWIFT has published mapping guidelines to translate SWIFT FIN messages to XML and will shortly publish mapping guidelines for XML to IAT. NACHA committed to to the same.

Banks and Vendors Supporting ISO 20022 XML

Banks

Vendors

>> Return to index of my posts from NACHA Payments 2008

OB10 is Middleware for the Financial Supply Chain [NACHA Payments]

[This is just one of my series of posts from the NACHA Payments 2008 conference in Las Vegas.]

OB10 - ERP and FI Agnostic Global eInvoicing [NACHA Payments]

OB10 is a well established buyer-centric eInvoicing solution, but they are in the process of reaching out to AR as well as AP to offer ERP agnostic, electronic payment and remittance solutions for buyers and suppliers alike. OB10 supports any file "any-to-any data formatting" and supports client workflow solutions to route payment data for approval and dispute resolution as well as messaging between trading partners to help resolve problems with exception invoices. The company is developing more robust AR support that will provide electronic remittance files for posting to AR, as well as PO delivery and validation, and supplier financing support. These features will be rolled first in Europe.

I was struck by the openness of OB10's platform and how it is positioning itself as the middleware of supply chain finance. In order for B2B payments to transition to electronic in meaningful numbers, there has to be a way to seamlessly connect the proprietary formats utilized by banks, ERPs, and payment processors.

It is not surprising that OB10 perceives paper scanning and OCR as its biggest competitor. Recognizing that businesses have to manage a mix of paper and electronic transactions for the foreseeable future, OB10 partners with a document processing firm to handle paper. Yet the persistence of paper, and the introduction of data entry errors, only exacerbates the B2B payment challenge.

OB1o offers its brand name buyer customers supplier enrollment expertise, the "infantry" necessary to facilitate supplier implementation on a multinational basis.

>> Return to index of my posts from NACHA Payments 2008

NACHA Payments 2008 - Forte Blog Index

I took a slight detour en route home from Las Vegas (via Death Valley and Yosemite - spectacular!) and just finished writing up my observations.

This year is the largest NACHA Payments conference to date (they get bigger and bigger each year) with nearly three thousand attendees. There were sessions devoted to ACH, check electronification, card solutions, global payments, corporate payment solutions and the payments industry over all. Over the course of the conference I attended eight sessions and had one-on-one conversations with seven vendors. I also participated in a press conference with the NACHA Leadership.

General Sessions & Overall Observations

Summary & NACHA Leadership Interview

Keynote/Peter Raskind, National City (general session)

Break Out Sessions

International Payments
ACI Worldwide & BofA

Global Remote Deposit Capture
Goldleaf Financial and Global Concepts/McKinsey

Corporate Mobile Banking
Celent & Wells Fargo

XML All Stars
BofA, JPMorgan Chase, GE Corporate Treasury, Upper Midwest ACH Association, ABN AMRO Bank

B2B Outlook
Federal Reserve, AFP, Cal State AAA, Costco

Remittance for Wires
Federal Reserve, CHIPS, SWIFT

NACHA's B2B Strategy
NACHA, Celent

How To Turn Your Online Bill Pay Expense into a Revenue Stream
eCom Advisors

Vendors

Bob Lund/eGistics

Elspeth Bloodgood/ChoicePay

Joe Salesky/ClairMail

Rob Peyton/OB10

Kathy Strasser/Wausau

Danne Buchanan/NetDeposit

David Peterson/Goldleaf

GTNews: Finding Extra Value in AP

This week GTNews explores opportunities to add value through Accounts Payable (AP) automation. We explored this topic in depth at the recent B2B workshop and featured many of the vendors that submitted articles on the topic to GTNews (including Bottomline and Ariba).

The Topsy-Turvy World of EIPP: Embraced by Payables Functions
Nancy Atkinson, Aite Group
This article looks at the benefits that A/P outsourcing can bring to the trading/partner relationship.

Look to Accounts Payable to Add Value
Drew Hofler, Ariba
A recent study explored how finance executives are looking at A/P to deliver bottom-line results.

Electronic Invoicing + Electronic Payments = Successful A/P Automation
Vince Bahl, Bottomline Technologies
How can organisations maintain DPO levels while capturing early settlement discounts through web-based payments platforms?

Strategic Impact of Accounts Payable Automation
Sush Koka, PayStream Advisors
Technology solutions to help eliminate paper and its adverse impact on the A/P process.

Optimising Accounts Payable to Ride Out a Recession
David Schnitt, IQ BackOffice
In what ways, can companies optimise their A/P?

Accounts Payable: Time to Automate
Nicole Buehler, Hyland Software
A/P professionals are under increasing pressure to improve productivity and comply with regulations - what action can they take?

There's lots more at GTNews.

Business Drivers for Payment Automation (TAWPI Conference)

[I am in Las Vegas for the TAWPI Payments in Transition conference – these are my notes from one of the sessions. An index of all of the sessions and links to the rest of my notes is here. - EMc]

Business Drivers for Payment Automation
Andrew Pery, Chief Marketing Officer, Kofax

[program blurb] Over the last five years, the role of accounts payables has changed dramatically. In the past, accounts payable departments were cost centers with responsibility for paying suppliers and updating the general ledger. Today, however, it is viewed as a critical function for optimizing cash flow and providing financial management support.  Driven by the need to improved efficiency and meet regulatory compliance mandates, accounts payable departments are striving to improve the services they provide for their organizations, while looking to reduce costs, increase efficiency and enhance business relationships.   In this presentation, Andrew Pery will explore these business drivers and how technology is evolving to reduce points of failure in the payment process, improve customer relations and drive repeat business. Pery's presentation will focus on five key phases of process: 

    * Early capture
    * Intelligent invoice recognition and extraction
    * Process transparency
    * e-invoicing
    * Data quality

[presentation]

My notes/observations:

Technology exists but integration is challenging.

Value of intangible assets “Physical assets are generally subject to decreasing returns while knowledge assets generally enjoy increasing returns because knowledge is cumulative –the more intensive the use of knowledge, the larger the benefits.” (source: Baruch Lev, Brookings Institution Press, 2001)

For example: 1) human capital, collective knowledge and wisdom of employees. How they interact with customers and suppliers. 2) process capital – enable and empower knowledge worker 3) customer capital – during relationship with customer, repeat business, customer loyalty.

Beware of cost of poor customer service. McKinsey study reveals that a nominal decline existing customer revenue can have major impact on profits. 5% decline in revenue from existing customers, results in 15% decline in profitability.

Customer- invoice, remittance = standard artifacts of business; predictor of repeat business, use data for competitive advantage.

How are organizations utilizing payment data? Not very well. Significant lack of visibility into payment – less negotiating leverage when entering contracts with suppliers; discounts/rebates/penalties, invoice status – working capital management is hampered.

Need integration.

AP spends a lot of time responding to inquiries (30%) – Have you received my invoice? When will I get paid? Rather than focus on resolving exceptions. Cost approx. $5-30 per call.

Invoice processing costs $80 – worst, $1 best (best requires EDI peer-to-peer, large provider with significant IT and small number of very large suppliers). Median cost is $11 per invoice.

Workflow – the real cost is exception handling and manual error corrections. In and outbound calls, invoice data clean up $20-40 per invoice for AP, $4-10 for AR. (See slide 6 of presentation for good diagram depicting average cost per element of workflow.]

What is the solution? Integrated, continuous channel for capturing data from various sources. A transactional vs. batch process. Capture invoice with email, fax, scanner, wherever it enters the organization. Capture and parse data – meta data related to vendor, date, inv #, dollar amount + line item information, what kind of document, determine status (no errors? Needs review/exception processing) is the PO number correct? – Use workflow to alert appropriate organizational contact (or supplier) to resolve issue.

5 possible ways to improve

1. Control paper flow – initiate early capture – when are docs scanned? AP 60% at end of business process (scan to archive, not as part of workflow). 71% respondents indicate they will implement early scanning. Yet organizations are decentralized, with offices in different time zones, locations, etc.
2. Reduce manual labor – capture data from document based on technology. Meta data moved to business application for matching and processing. Organizations (esp AP ) have not make use of it. Manual keying is labor intensive and error prone. Delays. Can’t get discounts. Intelligent doc recognition (requisition, PO, sales invoice, etc. – scan samples into system so system can infer based on doc layout and data elements)
3. Process transparency. Persistent, bi-directional dialogue with customers and suppliers – with access to image, analyze whether correct. Event based workflow to notify customer of exception or error. Push responsibility for resolution to supplier rather than AP. Provide supplier with acknowledgment that invoice received, notification of error, or acknowledgment that approved, processed and payment is forthcoming. Allows AP to focus on exceptions. Good service to supplier customers of AP.
4. Add electronic invoicing, too (2011 electronic expected to equal paper invoices). Hybrid solutions are necessary – receive invoices both electronically and paper. Similar workflow. 2-3 days to transmit paper invoice. Electronic 2-3 seconds.
5. Ensure data quality. Need highly reliable, quality data at every step in order to increase level of automation STP. Validate against PO

Savings = $22 savings per invoice.

Q – how far along in adoption of automated invoice processing?

Most organizations can capture invoices. Adding better doc recognition and proactive notification. Accelerated adoption of e-invoicing. But hybrid for many years to come.

Q biggest challenge?

Disparate technologies for capture, e-invoicing, notification – need to integrate in order to realize maximum benefit.

Q – How to encourage customers to send electronic invoice. They send PDF. That doesn’t really help. Okay, I’ve got an image.

XML version of document is most powerful, but not all supplier AR systems have capability.

>> Return to index of TAWPI conference sessions

Convergence of Payments & Forms Processing (TAWPI Conference)

[I am in Las Vegas for the TAWPI Payments in Transition conference – these are my notes from one of the sessions. An index of all of the sessions and links to the rest of my notes is here. - EMc]

The Convergence of Payments & Forms Processing
Mark Fairchild, Chief Technology Officer, BancTec

[program blurb] This session will explore opportunities and challenges related to the convergence of document processing and payments automation. You will hear what’s driving convergence, what we can expect in the next five years, and how to position your organization to compete.

[presentation not available]

My notes/observations:

Turning attention to the OTHER documents – not just checks. What is driving convergence of forms and payment processing, what can we expect in next 5 years, and how can your organization position itself to succeed?

Why? Competition creates differentiated services and drives down pricing. Paper payments market is commoditizing – very difficult to differentiate, evaluated on price alone. Using new services to compete more effectively: RDC, forms technology.

Businesses always trying to improve efficiency. Paper is inherently inefficient. Whether application, letter, remittance document, invoice, etc.

Regulation and Legislation play a key role in enabling process improvement– payment truncation requires regulatory change (e.g. Check 21) but on the forms side, no regulatory governance. Unless requiring legal signature.

US Adoption – Check 21 is helping to remove the document/check barrier. Now processers can treat check just like other documents that have to be imaged. No longer two separate processes for checks and other supporting docs (application form, for instance)

Technology is another key enabler – network band width, more centralized IT (web, smart client), more computing power for lower price, both color and grayscale images for forms.

Forms technology is much better in last 5 years. Structured forms (always same e.g. tax forms) vs. unstructured (e.g. letter) vs. semi-structured (invoice, you know what is on it but unsure where) – continued improvement in management and processing of forms data.

A lot of paper out there. US far more than other countries, although declining. Businesses are trying to reduce paper-based transactions. But won’t be disappearing anytime soon.

Countries with high cost of labor are early adopters of technology. Scandavia (high) vs. US (medium) vs. India (low).

Fairly consistent evolution, regardless of country:

1. Regulation – gov’t legislation that image is okay substitute – truncation okay.
2. Technology investment – image
3. Volume decline – businesses prefer electronic transactions, rather than paper.
4. Outsourcing becomes prevalent
5. Consolidation of processors
6. Processors develop new services in order to differentiate

Norway and Sweden. 100% outsourced, were a handful now 1-2 processors left. Other markets, mostly outsourced, 2-3 processors left. But US is different. Thousands of banks (vs. dozen on other countries), volumes are huge (30 billion vs. France 2^nd largest with 4 billion). Smaller countries legislated a time line. US “enables” and relies on market forces. Fairchild predicts that US will still trend toward consolidation and outsourcing like other countries. Outsourcers, processing fewer and fewer paper payments (volumes decline) and look to form processing to add value to services offered.

Globalization continues, greater competition, new payment types.

96% of B2B invoices are paper (per AIIM)

Continued blurring of form and payment processing. More forms automation with higher degree of accuracy. Full text search archives and by product of processing. Support costs drive centrally hosted systems that support capture and key anywhere for all doc types (SaaS); remote deployment via thin client/smart client.

Extend digital horizons – digitize at first opportunity FORMS too. Move toward STP. What you cannot read through CAR, use remote key (low cost locations). Reach out to customers and suppliers (integrate in order to reduce exceptions) – push automation throughout the whole value chain, not just one segment.

Fairchild suggests that rather than silo’d AR, AP solutions, companies should develop Shared Services Operations – essentially an internal outsourcer for document automation. Benefits include

• Aggregate volume from different parts of organization
• Consistent approach to planning, compliance and business continuity
• Foster best practices centrally vs. attempting to drive consistency and process improvements across a number of locations
• Can be complementary to outsourcing (peak volume outsourced, or outsource keying only to arbitrage labor costs)
• Similar processes in three areas: order input, receivables (payment + remittance), payables (invoices) – aggregate all docs/forms in one shared service with one archive, sufficient volume to outsource keying, one integration with ERP/host. Easier integration with supplier/customer (one interface vs. multiple)

Look for provider that can do forms + payment (eventually you will want to capture forms) where is the first opportunity to capture.

Network of common input and data entry devices – anywhere: mobile, regional headquarters, local offices, central corporate office, mail room, etc.

Shared Service Center provides central visibility, audit, control and prioritization of work.

Leverage payments technology and operational expertise to address forms. Higher levels of automation, cost savings, and new services.

>> Return to index of TAWPI conference sessions

SunTrust Launches Enterprise Spend Platform for Commercial Card Management

Two commercial card posts in a row...

SunTrust (a VISA corporate card issuer) announced today the launch of its Enterprise Spend Platform for commercial card management. There are five modules, allowing companies flexibility in implementing and scaling the solution to meet their needs.

Statement Manager allows clients to view and act on detailed statementsfor SunTrust and compatible multinational Purchasing Card and Corporate Card programs. Statement Manager also provides actionable transaction detail of compatible third-party statements such as cellular/mobile providers -- all on the same screen.

Transaction Manager provides tools to manage outstanding transactions that require attention. Clients can add General Ledger coding and comments, manage transaction disputes, break out sales tax, check for corporate policy compliance, submit expenses for manager approval, and confirm approval status.

Expense Manager allows detailed reporting of card and cash transactions against extensive travel and expense policies. It also supports General Ledger allocation, workflow approval, compliance monitoring and automated reimbursement directly to a SunTrust Corporate Card account.

Payables Manager helps clients integrate purchasing card into the payables payments mix by automating invoice payments to a dynamically funded purchasing card for direct settlement to the supplier. A/P personnel can manage supplier cards as well as payables files and exception transactions from one dashboard.

Requisition Manager allows clients to create custom requisition forms to fit any buying need. Requisitions can be developed with custom business rules and workflow, where upon approval, dynamically fund specific SunTrust cards for immediate spend capability that auto-match back to the requisition.

Learn more

• SunTrust press release

MasterCard's New Corporate Card Features Will Reduce Maverick Spending and Enhance Transaction Controls

Business Week has a write up on MasterCard's new inControl commercial card platform (previous Forte blog mentions here and here). Thus far, Royal Bank of Scotland is the only issuer offering the new product features, which include

• Enhanced authorization controls that direct how, when and where cards may be used to a greater level of specificity than previously supported (this particular restaurant is okay, this one is not).
• Intelligent routing capability that enables a transaction to be routed through to the appropriate funding source at authorization time, depending on the transaction characteristics.
• Robust alert functionality that provides personalized real-time communication on transaction activities.
• A one-time use number feature that allows authorization, spending limits and usability controls to be set on a transaction-by-transaction basis, providing enhanced levels of security, control, data capture and traceability on every purchase.

Having spent the last few months working with a Fortune 20 company to enhance its T&E reimbursement process, I know how valuable these tools will be. Proactively managing employee spend is much, much easier and far more effective than post-transaction auditing and warnings. Coupled with MasterCard's enhanced expense management reporting capabilities Corporate card program managers will have powerful new tools to reduce maverick spend and cut expenses.

Excerpt from Business Week:

The introduction of MasterCard's inControl credit card couldn't be better timed. As the economy falters, many companies are scrambling to trim travel and expense budgets, bumping workers from business class to economy and cutting back per diem food allowances for road warriors. Next up, MasterCard is looking to pitch a version of the card to parents who want to keep closer tabs on their offspring's spending habits.

Here's how inControl works: Using a Web-based interface developed by Orbiscom, a Dublin-based payments technology firm, a supervisor can set an overall spending limit for an individual employee or an entire staff category, as well as compile a list of approved hotels and restaurants (Pret A Manger, O.K.; Chez Panisse, not). They can also choose to have charges declined after a certain hour or at questionable establishments. Micromanagers will thrill at a feature that allows them to receive real-time updates on their employees' spending via e-mail or text message. The system also allows companies to issue staff or outside contractors cards that may be good for just one purchase or that expire in only one week. "It will help reduce maverick spending, improve compliance with corporate policies, and simplify accounting," says Steve Abrams, MasterCard's global head of commercial payments.

As yet timing for US roll out is not set, but it is anticipated that the features will become available in the consumer market as early as next year. 

Learn more:

• MasterCard inControl Press Release (September 11, 2007)
• Business Week Article: You've Been Pre-Rejected (April 10, 2008)

Obopay Targets Small Businesses

Obopay recently announced that "customers can now use their existing bank accounts to send and receive money via their mobile phone. With Obopay's mobile money transfer, non- customers can pick up payments without signing up for Obopay. These innovations make it easier than ever for any bank customer to conveniently send and receive payments from their mobile phones."

Obopay is targeting small businesses as well as consumers: "In addition to the obvious appeal to parents (with kids away at school), friends (who split dinner, activity or utility bills) and family (who send money to loved ones far away), Obopay gives small business owners the tools to pay employees, vendors or service providers immediately and conveniently." Obopay charges 10 cents per transaction for these transactions.

Obopay markets to merchants as well, pricing their services at a competitive 1.5% + 25 cents per transaction.

Learn more at the Obopay website.

Enhanced Expense Management Solution from MasterCard

Users of MasterCard corporate cards will benefit from an upgraded online reporting service providing greater flexibility and the ability to export expense data into other systems including popular ERP platforms (SAP, Oracle) as well as Excel.

Benefits for businesses:

• Transforms data into business intelligence -- provides powerful integrated reporting views and insights, leveraging transactional and enhanced data from hotel folios, airline, car rental, rail and other supplemental data procured from travel agencies.
• Provides a holistic view to global data -- virtually anytime, anywhere through a secure web-based interface. Single sign-on capabilities enable easy access to the reporting solution through issuers' websites.
• Simplifies global analysis and reporting -- local currency transactions can be translated into a single currency; additionally, 14 languages are supported: US and International English, Spanish, Castellano Spanish, French, Canadian French, German, Italian, Japanese, Dutch, Korean, Portuguese, Chinese, and Simplified Chinese.
• Provides spend data detail -- transactions and line item details can be automatically viewed resulting in deeper spend insights and the ability to better analyze data for vendor negotiations and pre-population of employee expense reports.
• Streamlines the accounting process -- accommodates multiple accounting systems and schemes resulting in powerful accounting capabilities that solve simple to complex requirements.
• Offers customizable expense monitoring -- spend alerts, specific data analysis and filtering, and tailored reports based on specific parameters can be easily customized to monitor spend and help ensure compliance.
• Supports exporting data into other systems -- exports to software programs such as Microsoft Excel(R) or enables feeds into ERP systems such as SAP, Oracle, PeopleSoft and other vendors.

MasterCard press release
American Banker coverage

MasterCard's Latest B2B Offering Targets Mid-Market, plus Large Corporates

Today MasterCard announces its Payment Gateway enabling businesses to pay their suppliers with either Purchase Card or ACH transactions and deliver remittance data. Unlike rival B2B services launched this year by AmEx and JPMorgan Chase, MasterCard is targeting small and mid-sized companies as well as large corporates, and it is selling the product through financial institutions that have the option of customizing the service to meet the needs of their business customers. Wells Fargo is piloting the new service under its own brand name and MasterCard is currently using it with its own suppliers. The Payment Gateway interfaces with ERP packages from Oracle and SAP.

Buyer Benefits

Improves Bottom Line.
Through one simple, efficient payment interface, payments are processed faster, enabling you to take advantage of significant discounts and freeing resources for other revenue-generating activities, enabling you to optimize working capital.

Reduces Costs.
The MasterCard Payment Gateway reduces paper check processing errors and expenses.

Leverages Existing Technology Investment.
Enhance control, tracking and security with no new technology investment. The MasterCard Payment Gateway integrates easily with your existing infrastructure, leveraging existing controls in your A/P process such as 3-way match. Additionally, payment is always buyer-approved and buyer-initiated.

Supplier Benefits

Shrinks Costs. Grows Profits.
The MasterCard Payment Gateway isn’t only a tool for your customers, it can also help you improve your bottom line. It can help to grow profits by optimizing working capital (reducing Day Sales Outstanding), reducing chargeback and fraud risk, and operational costs associated with paper check processing.

Go Faster Easier Than Ever.
The MasterCard Payment Gateway processes payments automatically. No more manual, paper-based processing. And reconciliations are much faster with the enhanced remittance data provided by the Gateway.

Build Your Business.
When you enroll, you’ll be included in a B-to-B Supplier Directory that puts you right at the fingertips of new and current customers. The directory is super easy for them to use. Fortunately, we’ve made enrolling just as easy for you.

Learn more:

• MasterCard Payment Gateway website
• American Banker coverage

JPMorgan + Xign = APTrac (reducing B2B check payments)

Yesterday JPMorgan announced the launch of AP Trac, the first new service based on its purchase of Xign back in May.

APTrac is intended to replace paper checks, settles transactions via the purchase card network, delivers remittance data, and allows both buyers and sellers to track payments online. APTrac should be attractive to corporate AP as no additional hardware or software is necessary and it interfaces with leading ERP and AP systems.

Benefits for Corporate AP

• Optimizes working capital by increasing payment float while speeding up payment to suppliers.
• Reduces operational costs by leveraging electronic payments with straight-through processing.
• Provides increased control since only payments that are buyer-approved and buyer-initiated via our secure gateway can be authorized.
• Extends the reach of a purchasing card program by bringing new classes of spend to a card, such as capital goods, advertising and more.
• Makes paying a supplier as easy as your process for a check run.

Learn more:

• Press Release
• APTrac product page on JPMorgan website
• American Banker coverage

American Express Buys Harbor Payments - enabling new suite of "source to settle" electronic purchasing systems

Courtesy of Bank Technology News

American Express has signed an agreement to acquire Atlanta-based Harbor Payments, a privately held provider of electronic invoice presentment and payment (EIPP) systems. American Express says the Harbor hosted technology will become the basis of its new suite of “source-to-settle” electronic purchasing systems, named S2S. It will begin marketing the package to corporations in the US in January 2007 and has plans to expand on a global basis later. "Our clients have been asking American Express to play a broader role in helping them manage expenses and reduce costs across a broad array of purchasing categories," says Gordon Smith, president of American Express Global Commercial Card. "The goal is to help companies automate and seamlessly integrate the multiple steps in the source-to-settle process." Harbor, founded in 2000, has approximately 200 clients. Financial terms of the deal were not disclosed. The deal is expected to close by the end of 2007

AmEx Press Release