The (R)evolution of Supplier Payments
Presented by Mark Brousseau
About Corcentric Corcentric is a global provider of market-leading Source-to-Pay, Order-to-Cash and Fleet Solutions.
From the mid-market to Fortune 500 businesses, Corcentric delivers strategic advisory, technology and managed services focused on reducing cost to improve working capital.
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Who We Are
Cherry Hill, NJPhiladelphia, PA
Washington DC
New York, NY
Fort Lauderdale, FL
Chicago, IL
Naples, FL
Cleveland, OH
Carmel, IN
Atlanta, GA
London, UK
Aix-en-Provence, FR
Paris, FR
Founded in
1996
2,000+customers and growing
500+Employees globally
15global offices (locations)US & Europe
$500B+in annual transaction value
32M+transactions processed
95%+customer retention rate
35+countries deployed solutions
Corcentric Value Model In Every S2P Solution
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Innovative solutions and industry expertise to advance finance and procurement for operational excellence
Outcomes
Minimize Risk Drive Innovation
Enhance Visibility Enable Growth
Increase EBITDA Deliver Customer Satisfaction
Improve Working Capital
Increase Business Agility
Mark Brousseau PresidentBrousseau & Associates
Mark Brousseau is a noted analyst, speaker, writer, and marketer, with more than 26 years of experience in advising leading providers of financial operations solutions and services.
Brousseau is president of Brousseau & Associates, a full-service strategic marketing and business development consultancy with the largest client base of any firm of its kind.
Business as Unusual
Adapting to the Next Normal
Why Quit Checks
Learning objectives
1. 2. 3.
4. Wrap-Up
Business as UnusualThe (R)evolution of Supplier Payments
New Ways of Working
8
3%
1%
5%
33%
58%
None of us worked remotely
Most of us have returned the office
All of us have returned to the office
Most of us are working remotely
All of us are working remotely
How has COVID-19 effected the way your AP team operates?
33% of AP pros are working longer days
since the onset of COVID-19.
8% of AP pros are working an additional 2
hours per day.
Source: IOFM Virtual Town Hall Meeting, 6/21/20
New Operational Challenges & Risks
9
5%
22%
6%
20%
25%
22%
No response
Something else
Inadequate visibility
Missed invoice due-dates
Fraud and compliance issues
A spike in supplier inquiries
What is the biggest payments-related challenge that you currently face as a result of COVID-19?
19% of businesses are “concerned” about
their current invoice processes.
7% of AP leaders are “overwhelmed” by
their current processes.
Source: IOFM Virtual Town Hall Meeting, 4/27/20
New Economic Pressures
10
29%
45%
25%
Not sure
No
Yes
Has COVID-19 negatively impacted your organization's ability to manage its corporate spend? 62% of businesses
have experienced lower revenues
because of COVID-19
66% of businessesexpect to reduce
spending because of COVID-19
Source: IOFM Virtual Town Hall Meeting, 5/4/20
New Economic Pressures
11
24%
2%
74%
Not sure
No
Yes
Do you believe your organization’s spend management needs to improve?
Source: IOFM Virtual Town Hall Meeting, 5/4/20
Immediate crisis response
Transitioning to new modes
of working
Settling into an operational
rhythm
A Whirlwind Response to Change
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The Way Businesses Pay is Changing
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8%
3%
35%
20%
17%
14%
3%
No response
None of them
1% to 24%
25% to 49%
50% to 74%
75% to 99%
All of them
Since the onset of COVID-19, what percentage of your payments to suppliers are made with a paper check?
Source: IOFM Virtual Town Hall Meeting, 4/27/20
Before COVID, 41% of businesses made at least
half of their supplier payments by check
The percentage of AP departments that make at
least half of their payments by check has declined by 7
percentage points
Why Pay Suppliers Electronically?
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Helps Businesses Return to Growth
• Supports Work from Home
• Keeps operational costs down
• Increases profit margins
• Enables scalability without the need for more staff
Enhances Cash and Spend Management
• Creates transparency across the AP cycle
• Provides real-time visibility into cash & spend
• Uncovers working capital opportunities
• Helps minimize fraud and compliance risk
Strengthens the Supply Chain
• Facilitates early payment options
Source: 2019 AFP Electronic Payments Survey
Adapting to the Next NormalThe (R)evolution of Supplier Payments
Paying Suppliers is a Manual Task
16
9%
44%
11%
27%
6%
Fully automated with few or no manualprocesses
Largely automated, but we are automatingfurther
Largely automated and we have no plans toautomate further
Not very automated but we plan toautomate further
Not very automated and we have no plansto automate
How would you describe your current level of AP automation? 14% of businesses
process supplier invoices in a completely manual
environment.
59% of businesses paid a supplier late during
COVID because of operational issues.
Source: IOFM Virtual Town Hall Meeting, 6/21/20
Old Habits Die Hard
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AP departments are dissatisfied with paper checks, but keep sending them anyway
49%
64%
66%
69%
70%
73%
74%
77%
83%
69%
Cryptocurrency
Checks
Cash
epayables/vcards
Credit cards
Debit cards
Digital wallets
ACH
Same-day ACH
Average
AP professionals' level of satisfaction with methods used to pay suppliers
Source: PYMNTS Payables Friction Playbook
81% of AP departments pay
suppliers with checks
The High Cost of Paper Checks
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Treasury(per item)
Postage & envelopes
Monthlymaintenance Check stock
Proper paper,MICR toner,
Software
Mailing supplies
Clearing, positive pay, imaging
Controlled disbursement, positive
pay, imaging,stop pays
Manualtasks
Printing, sorting, stuffing, following up
on uncashed, escheatment
$5.95Most checks range
from $3-$8
Source: American Bankers Association
AP Staffs are Bogged Down
19
security exposure
failedpayments
100s of suppliers
100s of payments
ever-changing supplier
information
expansion in number of physical locations
more than one ERP system
complex system
integration
changing compliance
require-ments
multiple bank
accounts
pressure to reduce operational
costs
lack of IT resources
The Problem with Manual Processes
20Source: IOFM Future of Accounts Payable Study
(R)evolution or Bust!
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54%46%
Has your finance department postponed planned investments because of COVID-19?
Yes No
35% of businesses have unified, real-time visibility into working capital information
54% of finance departments have unified, real-time
visibility into corporate spend
Source: IOFM Virtual Town Hall Meeting, 5/4/20 & 5/11/20
Holistic Payments
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Single Payments File
Automated clearing house
Virtual credit card
Paper checks
Why Automate in Tough Times?
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Faster scale
Increased cash flow
Extended DPO
Lower Cost of Goods
Supply chain
strength
Smart Cash Controls
• Real-time visibility• Financial modeling and forecasting• Payment terms optimization• Supply chain financing• Cash-back rebates
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New Era, New Expectations
25
7%
26%
1%
5%
29%
11%
20%
Whichever gets me my money
Easy to reconcile
Contactless
Cashless
Traceable
Faster
Cheaper
Which of the following payments characteristics is your highest priority in the new era of payments?
Source: TMANY Virtual Cash Exchange, 7/1/20
The Power of Payment Terms
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Request Early Pay Discounts Supply Chain Finance
Offer Terms Based on Payment Type• Virtual Card: 15-20• ACH: 25-30• Check: 45-60
Coordinate Efforts with Purchasers• Incorporate payment options into the purchase process
Early Payment Discounts
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Involve Purchasers Streamline ApprovalsLook on invoices
Example2/10 NET 30 term is equivalent to a 36% APR
(2% * $10,000) / ($10,000 * 20 / 360)
• Be sure to factor in cost of capital• If APR is greater than cost of capital, the discount makes sense
~10% of spend is discount eligible• $50MM * 10% * 2% = $100,000 savings!
How to Drive Supplier Adoption
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Engage treasury & procurement
Review your payment terms, develop a payments strategy
Develop an onboarding strategy• Leverage multiple outreach methods
Emphasize theSupplier benefits
Never stop onboarding
Why Quit ChecksThe (R)evolution of Supplier Payments
The Next Normal
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57% 52% 34%of businesses expect to earn more card rebates within the next 3 years
of businesses expect to capture more early payment discounts
of businesses want to extend their standard payment terms
Working Capital Optimization is a top priority for businesses
Source: IOFM Future of Accounts Payable Study
The Best-in-Class vs. The Rest
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50%
44%
34%
52%
51%
66%
62%
76%
77%
79%
81%
81%
88%
92%
Standardized AP processes across the enterprise
Ability to match invoices to contracts or payment plans
Ability to provide rich remittance information to suppliers
Ability to process invoices straight-through (i.e., matching andvalidation without human intervention)
Ability to measure key AP metrics (e.g., invoice processing cycletime, invoices processed straight-through, discounts…
Two or three-way matching capabilities (i.e., match invoice toPOs and/or good received notes)
Ability to make electronic payments (e.g. ACH, card, etc.)
Best In Class All Others
Source: Ardent Partners 2019 State of ePayables Report
Payments & Business Growth
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Revenue growth Profitability Cash
managementSupplier
relationshipsRisk
Management
Wrap-UpThe (R)evolution of Supplier Payments
The Value of Accounts Payable
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19%
36%
24%21%
Exceptionally valuable Very valuable Somewhat valuable Little value
The current perception of AP
Source: Ardent Partners 2019 State of ePayables Report
The Post-Pandemic Role of AP
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Improving profit margins
Increasing enterprise
agility
Freeing up cash flow
Mitigating compliance
risks
The Post-Pandemic Role of AP
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Improving profit margins
Increasing enterprise
agility
Freeing up cash flow
Mitigating compliance
risks
SUPPLIER PAYMENTS AUTOMATION
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