the (r)evolution of supplier payments · ability to process invoices straight-through (i.e.,...

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.


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


New Economic Pressures

11

24%

2%

74%

Not sure

No

Yes

Do you believe your organization’s spend management needs to improve?


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

13

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?


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.


Old Habits Die Hard

17

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

22

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

31

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

32

Revenue growth Profitability Cash

managementSupplier

relationshipsRisk

Management

Wrap-UpThe (R)evolution of Supplier Payments

The Value of Accounts Payable

34

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

Online Corcentric Resources

www.corcentric.com

Thank You [email protected]

Want to learn more about how Corcentric can help with electronic payments?Contact us to speak with an expert.

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