supplier payment optimization with virtual card payments- b2b virtual payments
TRANSCRIPT
Supplier Payment
Optimization with
Virtual Card Payments
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Store Financial at a Glance
Providing card payments across the world since 2004
Manages 650 card programs for 450 corporate payers
Issuing payments in four currencies: USD, CAD, EUR,
and GBP
Support 24/7 in English and French
Processing about $2 Billion in B2B payments in 2014
About Store Financial Select Valued Clients
?
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B2B Payments are Evolving
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
2004 2007 2010 2013
48%
25%
8%
19%Very Likely
Somewhat Likely
Not at all Likely
Already Have
Source: 2013 ePayments Survey, The Association for Financial Professionals
Likelihood of Converting Major
Suppliers Payment Method from
Check to Electronic
Use of Checks for
B2B Payments
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Corporate Payments Today
Checks50%
ACH 35%
Wire Transfer
10%
P-Card5%
Typical B2B Payment Mix Optimize your Payments
Know your Company
Understand Optimization
Initiatives
Leverage Technology
Partners
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95% of current payment mix
COSTS corporates money
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What variables drive the most value for your company?
Payment Optimization
Improving DPO
Cost Per Payment
Early Pay Discounts
AP Processing
Cost
Discount Capture
Card Incentives
Trade Terms
Card Rebates
Payment Float
AP Automation
Virtual Card
Dynamic Discount
Supply Chain
Finance
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P-Card
ACH
Check
V-Card
V-Card
V-Card
Understand Optimization Initiatives
• Static or Dynamic?
Early Pay Discounts
• AP Automation, Outsourcing, Payment Types
Process/Cost Reduction
• Extending terms, Supply Chain Finance
Trade Terms
• P-Card, V-Card, what are the differences?
Card Incentives/Rebates
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Leverage Technology Partners
• Supplier Relationships
• Knowledge of Internal Process
• Business Knowledge
InternalStrengths
• Scale
• Supplier Enablement
• Technology/Security
Partner Strengths
Understand where your team excels…
…and where you can leverage a partner’s expertise.
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Begin your Optimization Effort with Cards
Physical
P-Card T&E Card
Virtual
V-CardStraight Through
Processing
Card Options:
Fastest Return on Investment
• 57% of businesses already accept cards according to recent AFP study
• 37% accept cards for transactions over $5,000
Supplier Enablement
• Optimization success is driven by supplier participation in your program
• Profitable enablement campaigns are nearly impossible without a partner
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What Is A Virtual Card?
B2B payment using
the MasterCard
payment network
Single-use card
issued to specific
supplier for specific
amount via Store
Financial’s Custom
Loop™ private-label
processing service
Secure, 16-digit
payment number…
No plastic card
needed
Less costly &
reduced risk
versus issuing
check or ACH
Universally
accepted by
any supplier
with card
acceptance
capabilities
********1234
A V-Card Is::
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Virtual Card Benefits
Generate a
rebate for
the buyer
organization
Can be used to
pay any invoice
for any payment
amount
Coexist with
P-card and
T&E card
programs
Eliminates
1099 filing
requirements
V-Card Payment Benefits::
Most secure
B2B payment
Does not require
changes to your
existing banking
relationship or
ERP system
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P-Card Payments V-Card Payments
Convenience
High Rebate /
Interchange
Limited Supplier
Acceptance
“Walking Plastic” Lower Supplier
Acceptance Fees
Targeting ACH and
Check Spend
Virtual, Single
Use Cards
Higher Supplier
Acceptance
P-Cards & V-Cards Coexist
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• Supplier conversion and enablement
• Lower supplier acceptance fees
• Virtual card management and delivery
• Buyer and supplier support
• Reconciliation tools
Store Financial Program
Differentiators
• Wrong Product: P-Card
• Not All Variables Considered
• Poorly Planned Enablement
Past Supplier Enrollment
Campaigns have failed…
…Why?
Full-Service Virtual Card Payment Program
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Su
pp
lie
r A
cc
ep
tan
ce
Ra
tes
Reduced Acceptance Cost
Not All V-Card Programs Are The Same
Standard Credit Cards and P-Cards
Large Ticket AdjustmentCapabilities
Variable Supplier Fee Structure
Private Network V-Cards
Store Financial Payment
Optimization Programs
Standard Bank
Programs
$ Highest $ Lower13
Virtual Cards allow you
to capture more rebates
at all levels of spend
Where Store Financial Virtual Cards Fit
P-Card
ACH
Wire
Check
V-Card
V-Card
V-Card
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Special Focus on Suppliers
• Detailed payment education
• Enabling card-acceptance
• Working with supplier’s merchant
acquirer to lower card acceptance costs
• Continuous supplier relationship
management
Store Financial creatively
enables supplier payments.
Supplier Benefits
• Faster payment/reduced DSO
• Lower acceptance costs
• Enhanced remittance data
• Improved reconciliation efficiency
• Enhanced security of payments
Supplier Friendly Practices
Supplier Enablement = Success
Issuing
Acquiring
Sto
re F
inancia
l Bank
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Supplier Analysis– Targeting the highest opportunities – 100% supplier targeting
is also possible.
Supplier Marketing – Buyer branded campaign with buyer’s preferred “tone.”
Store Financial on “behalf” of buyer markets and contacts all targeted suppliers.
Supplier Activation – Each supplier logs into the portal to provide credentials,
payment preferences and agrees to card acceptance.
Profile Validation – Each supplier is validated along with confirmation of card
acceptance credentials.
Profile Management – Suppliers are able to self-administer profiles. Each time a
profile is modified, the credentials are re-validated.
Payment & Remittance – Remittance data is delivered to suppliers in customized
formats to improve reconciliation efficiency.
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S u p p l i e rS e l e c t i o n
S u p p l i e rM a r k e t i n g
P r o f i l eA c t i v a t i o n
P r o f i l eV a l i d a t i o n
P r o f i l eM a n a g e m e n t
P a y m e n t & R e m i t t a n c e1 2 3 4 5 6
Supplier Enablement Process
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Sample Revenue Opportunity
SUPPLIER ENABLEMENT
Terms Total Spend 10% 20% 30% 40% 50%
< 2% Discount $ 2,328,811 $ 1,467 $ 2,934 $ 4,401 $ 5,869 $ 7,336
> 2% Discount $ 1,438,260 $ - $ - $ - $ - $ -
Pay Immediate $ 373,332,403 $ - $ - $ - $ - $ -
Within 15 Days $ 32,908,008 $ - $ - $ - $ - $ -
Within 20 Days $ 7,332,458 $ 4,619 $ 9,239 $ 13,858 $ 18,478 $ 23,097
Within 30 Days $ 444,790,441 $ 328,789 $ 657,578 $ 986,367 $ 1,315,156 $ 1,643,945
Within 35 Days $ 10,317,359 $ 9,533 $ 19,066 $ 28,600 $ 38,133 $ 47,666
Within 45 Days $ 314,290,184 $ 408,106 $ 816,212 $ 1,224,317 $ 1,632,423 $ 2,040,529
Within 60 Days $ 3,530,667 $ 5,240 $ 10,479 $ 15,719 $ 20,958 $ 26,198
Grand Total $ 1,190,268,590 $ 757,754 $ 1,515,508 $ 2,273,263 $ 3,031,017 $ 3,788,771
Incremental Borrowing Cost - 2% $ 63,994 $ 127,988 $ 191,982 $ 255,976 $ 319,970
Buyer Rebate $ 693,760 $ 1,387,521 $ 2,081,281 $ 2,775,042 $ 3,468,802
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Buyer signs NDA and provides supplier list
Store Financial conducts supplier analysis
Program plan and proposal submitted to buyer
Supplier payments optimization agreement signed
Co-develop and approve supplier enrollment campaign
Approves A/P process and ERP file integration
Buyer upfront cost = $0
Leave the rest to Store Financial
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Getting Started
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How can your company
optimize payments
and earn rebates?
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