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Electronic Payments: Increasing Volume Through Supplier Enablement. Dean M. Leavitt, Chairman & CEO Boost Payment Solutions, LLC. The B2B Landscape. 1) 2010 Federal Reserve Retail Payments Study

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slide1

Electronic Payments: Increasing Volume Through Supplier Enablement

Dean M. Leavitt, Chairman & CEO Boost Payment Solutions, LLC

the b2b landscape
The B2B Landscape

1) 2010 Federal Reserve Retail Payments Study

2) 2009 funds transfer data (wire data) processed by Fedwire and CHIPS derived from multiple sources.

  • U.S. B2B Spend: $109.5 trillion
  • U.S. B2B # Payments: 13.4 billion
  • U.S. B2B Paper-based Spend: $21 trillion
  • U.S. B2B # Paper-based Payments: 7.5 billion
  • U.S. B2B ACH/Wire Spend: $88.1 trillion
  • U.S. B2B # ACH Payments: 2.7 billion
after 60 years b2b opportunity dwarfs b2c
After 60+ Years… B2B Opportunity Dwarfs B2C

U.S. B2C Card Payments

(Mature and Saturated)

U.S. B2B Paper Payments

(Virtually Untapped)

$21T

$2.6T

_______________________________________________

Source B2B - HSBC Global Commercial Products, Nilson Report, US Government records

market overview changes are afoot
Market Overview: Changes Are Afoot

Source: First Annapolis Navigator, RPMG study – June 2011

Electronic Payments are on the Rise But…

Supplier Enablement is Still a Challenge!

an evolving b2b technology landscape
An Evolving B2B Technology Landscape

Transaction Size

Spend per Supplier

Buyer Initiated

Payments

Single Use

“V-Cards”

“Ghost”

Cards

“Walking

Plastic”

Technological Advancement

technology solutions
Technology & Solutions
  • POS Terminals
  • Time-consuming Settlement Procedures
  • Paper Statements
sales marketing strategies
Sales & Marketing Strategies
  • Merchant Centric
  • Retail Store Orientation
  • Untrained Sales Organizations
  • Selling “Rates” to Store Managers
risk evaluation
Risk Evaluation

One Time Retail Store – Consumer Encounter

Merchant Has Access to Card Number

Multiple Transaction Capabilities

  • Face-to-Face
  • Online/MOTO
chargebacks
Chargebacks

Based on Chance Encounter Between

Consumer Cardholder and Retailer

interchange rates
Interchange Rates

$67 Average Ticket

technology solutions1
Technology & Solutions
  • Buyer-Initiated Payment Programs
  • PCI Compliant B2B Gateways
  • EIPP/EIP Vendors
  • EDI Records
  • AP/AR Systems Automation
sales marketing strategies1
Sales & Marketing Strategies
  • Buyer Centric
  • Corporate Orientation
  • Trained and Dedicated Sales Force
  • Selling to CFO/CPO/CIOs
  • Expanded Use of P-cards
risk evaluation1
Risk Evaluation
  • Based on Existing Vendor - Vendee Relationship
chargebacks1
Chargebacks
  • Global Card Brands Adjusting Rules
interchange rates1
Interchange Rates

$500,000+ Ticket

slide20

And It’s All About Supplier Enablement!

Pre-

Campaign

Wrap-up

Develop Game Plan & Analytics

Recap & “Clean-up”

Enhanced Data & Progress Reports

Supplier Outreach

Educate & Communicate

Supplier Enablement

Reporting

Acquiring

value proposition for purchasers
Value Proposition For Purchasers
  • Rebates
  • Elimination of check writing and delivery costs
  • Increased efficiencies across all procurement/AP activities
        • Enable superior reporting
        • Easy accounting for adjustments
  • Ability to combine mission-critical data with payments
  • Compliance with “Green” strategy
value proposition for suppliers
Value Proposition For Suppliers
  • Retain or enhance relationship with customers
  • Earlier payment reduces DSO and frees up working capital
  • Elimination of check receipt and processing costs
  • Increased efficiencies across AR activities
  • Complete integration of payments into AR system
      • EDI 820 or 823
      • BAI or BAI 2
      • CTX
  • Ability to combine mission-critical data with payments
  • Compliance with “Green” strategy
best practices for a successful campaign
Best Practices for a Successful Campaign
  • Secure Buy-In at Every Level of Client
  • Establish Milestones & Set Expectations
  • Mandate Acceptance Whenever Possible
  • Adjust Payment Terms (“Carrots & Sticks”)
  • Well Thought-out Communication Strategies and Materials
  • Educate Suppliers – Dispel Myths and Misinformation
  • Detailed Progress Reports (Call an “Audible”if Needed)
  • P-card Acceptance “Baked” into New Contracts, Renewals, RFPs…
best practices for a successful campaign1
Best Practices for a Successful Campaign

Conversion Rate

Implementation of Best Practices

slide28

Carrots & Sticks

&

  • Mandate Whenever Possible
  • Reward Supplier for Participation
  • Penalize Supplier for Non-participation
  • Combination = Successful Campaign
pre campaign must dos
Pre-Campaign “Must Dos”
  • Segment Supplier List
  • “Scrub” Supplier List
  • Financial Tools to Determine Impact to Client & Suppliers
  • Establish Communication Strategy
  • Develop Communication Message(s)
  • Establish Time Frames and Milestones and Reports
financial analytics
Financial Analytics
  • Understand Client’s AP Culture
  • Apply Filters based on Client’s Goals
  • Identify Outliers and “Ripe Fruit”
  • Project Financial Win or Loss
      • Client/Buyer
      • Suppliers
  • Make Recommendations
multifaceted approach
Multifaceted Approach
  • Good Old Fashioned Letter
  • Face-to-Face Meetings
  • Outbound Telephone
  • Inbound Telephone
  • Webinars
  • Online Set-up
a true mandate
A True Mandate

We are directed under the Debt Collection Improvement Act of 1996, Section 3720C, to change to electronic vendor payments. As a result, future payments are to be made by an electronic credit card process.

It is our intention to begin the process of reevaluating our procurement activities with respect to those suppliers that refuse to accept our procurement card immediately.

getting suppliers on board
Getting Suppliers On-Board
  • Carefully Study Your Prospective Supplier
  • Anticipate Objections
  • Always Engage the Decision Maker (Scrubbing Key!!)
  • Know Exactly What Their Costs Will Be
  • Understand Their Current and Future Options
  • Teach Them that Card Acceptance is Not a Penalty
  • Make Signing Up Easy for Them
  • Follow-up!!!
critical tool
Critical Tool
  • Lack of Reports = Biggest Complaint From Stakeholders
  • Spot Trends Before they Occur
  • Keep Client and Issuer Up To Speed
  • Analyze Success of Campaign
  • Ability to Call an “Audible”
post campaign wrap up
Post-Campaign Wrap-Up
  • Analyze Data on Campaign To Date
  • Develop Communication Strategy for Non-Participants
  • Develop Communication Materials and Implement “Final” Outreach to Non-Participants
  • Recap Campaign results with Purchaser and Issuing Bank
  • But…
a successful campaign never really ends
A Successful Campaign Never Really Ends…
  • Establish Strategy and Procedures for New Suppliers
  • Alert Purchaser of Non-Participating Suppliers’ Acceptance From Other Purchasers
  • Advise Purchaser of Changes in e-Payables Marketplace