Creating the Merchant Value
Proposition for Electronic Payments
October 17, 2012
Agenda





2
Market Background
Electronic Payments Overview
Case Studies
Merchant Value Proposition Defined
Enrollment Best Practices
2012 Ceridian Corporation. All rights reserved.
Market Background
Today’s Payment Landscape
“Manual, paper-based
accounts payable
departments are eroding the
bottom line of large and
mid-market enterprises by
an order of millions of
dollars each year….and the
stage is set for a major
financial makeover.”
Source: Aberdeen Group, E-Payables Solution Selection Guide
3
2012 Ceridian Corporation. All rights reserved.
Market Background
74%
B2B payments made with paper checks
$38B
Total transaction cost savings
Source: 2010 Purchasing Card Benchmark Survey, RPMG; Association of Financial Professionals
4
2012 Ceridian Corporation. All rights reserved.
Market Background
Payment choices have continued to emerge, giving organizations more
choices that deliver process efficiency improvements, revenue benefits
and greater overall control
Expanded
Existing
Check/Wire/ACH
Check/Wire/ACH
Single-Use Accounts
Purchasing Card
Purchasing Card
T&E
T&E
Advanced Technology Drives Evolution of Payments
2012 Ceridian Corporation. All rights reserved.
Market Background
Payment Methods – Past, Present and Future
Payment Types by Volume, Recent and Planned Changes
Payment
Method
Current Volume
% Respondents
Changed over
Past Two Years
% Respondents
Expecting
Change over
Next Two Years
Check
50%
- 41%
- 71%
EFT/ACH
32%
+ 58%
+ 77%
P-Card
9%
+ 27%
+ 38%
Wire Transfer
9%
+ 7%
+ 2%
Source: Aberdeen Group, August 2011
6
2012 Ceridian Corporation. All rights reserved.
Electronic Payments Overview
Payment optimization is a framework for extracting
permanent benefits from corporate accounts payable
and procurement functions.
“Transforming the payment process has moved from
a long-range goal to a short-term priority.”
--Treasury executive
The Goal:
Streamline business processes,
lower overall costs and contribute to
incremental margin improvement
7
2012 Ceridian Corporation. All rights reserved.
Electronic Payments Overview
Top Pressures that Drive AP Optimization
Impact of Process Inefficiency
Risk of Fraud
Difficulty Managing Cash
Difficulty of Working with Information
in Paper Format
Top-down Cost-reduction Mandate
0%
Source: Aberdeen Group, May 2010
8
2012 Ceridian Corporation. All rights reserved.
10% 20% 30% 40% 50% 60%
Electronic Payments Overview
Top Challenges that Impede Payments Optimization
Percent of Respondents
Lack of integration between electronic payments and
account systems
38%
Inability to send or receive automated remittance
information with electronic payments
31%
Shortage of IT resources for implementation
27%
Difficult to convince suppliers to accept electronic payments
27%
Check system works well
26%
No executive sponsorship
20%
Source: Aberdeen Group, May 2010
9
2012 Ceridian Corporation. All rights reserved.
Electronic Payments Overview
10
2012 Ceridian Corporation. All rights reserved.
Payment Optimization Framework
11
2012 Ceridian Corporation. All rights reserved.
Electronic Card Payments Overview
Alternative to check or ACH
Unique, one-time use account number
Specific payment and dollar amount
12
2012 Ceridian Corporation. All rights reserved.
Simplified Remittance for Supplier
•
•
•
•
•
13
Convenient, easy to accept
and process
Detailed information
delivered via mail or email
Settlement instructions
communicated
Flexible network options
Access to Comdata
Business Network
2012 Ceridian Corporation. All rights reserved.
Electronic Card Process Overview
6. Matched reconciliation
Company AP
Financial
System
1. Payables
disbursement file
5. Transaction data
Processing
Network
2. Response file
3. Payment
information
4. Authorize and settle
Vendor
Campaign
Management
14
2012 Ceridian Corporation. All rights reserved.
Case Study:
Leading specialty retailer and the world’s largest direct
marketer of hunting, fishing, camping and related
outdoor merchandise



15
NYSE: CAB
2011 revenue $2.8B
34 retail stores
2012 Ceridian Corporation. All rights reserved.
Case Study:
Overview
Process
•
•
•
•
Transition from check to
electronic payments
Leverage another payment
type to achieve savings
Contribute to incremental
margin improvement
Utilize a variety of tools
•
•
•
•
16
Executive sponsorship
Employee orientation
Systems integration
Supplier strategy – direct and
indirect
2012 Ceridian Corporation. All rights reserved.
>
>
>
>
>
>
Virtual card payments for AP
Daily reconciliation
Suppliers enrolled
Implementation challenges
Payment improvements
$10M monthly program goal
Results: $1.3M Annually
Case Study:





Migrate to virtual card
Reduce manual checks
Reconcile daily
Build supplier participation
Contribute monthly revenue
Average Cost Per Check
$5.14
Number of Virtual Cards
19,400
Average Transaction Size
$4,600
Transaction Volume
$90,478,044
Rebate
$1,266,692
Check Elimination Savings
$99,716
Total Annual Return
$1,366,408
*Example only – rebate based upon billing and payment terms.
17
2012 Ceridian Corporation. All rights reserved.
Value Proposition
Buyer’s Perspective/ Supplier’s Perspective
Moving to Electronic Payments
•
Check to card, ACH, wire
•
Payment terms (30, 45, 60, 90 days)
•
Discounts (payment incentive)
•
Remittance detail (information delivered)
•
Systems integration (information reconciled)
Considerations
•
Treasury management strategy
•
Supplier leverage
•
Value equation
18
2012 Ceridian Corporation. All rights reserved.
Overcoming Objections
•
•
•
•
•
19
Listen to your suppliers
Discuss payment options
Leverage payment terms
Include in contract negotiation
Provide acquiring partners
2012 Ceridian Corporation. All rights reserved.
Supplier Considerations
•
Value of accelerated cash flow
• Card acceptance 1.5% to 3.0%
• Discount offered 2% net 10-15
•
Simplified process
AR reconciliation and internal
processes
Average receivable amount,
ticket size, DSO
Lower collection cost or bad
debt reduction
Pricing strategy
•
•
•
•
20
2012 Ceridian Corporation. All rights reserved.
Enrollment Best Practices
•
•
•
•
•
•
21
2012 Ceridian Corporation. All rights reserved.
Secure executive sponsorship
Communicate internally
Target 100% of vendors
Segment and profile vendor base
Be consistent with your message
Campaign continuously
Organizational Commitment
Moderate ~ to Full Engagement
22
2012 Ceridian Corporation. All rights reserved.
Summary
•
•
•
•
23
Focused efforts yield cost
savings, margin improvement
and streamlined processes
Transition to electronic
settlements and lower overall
processing costs
Maintain a balanced approach
Continuous improvement
requires effective change
management
2012 Ceridian Corporation. All rights reserved.
Questions?
For more information,
contact Bob Sneed at
Comdata Corporation
p. 615-376-6891
bsneed@comdata.com
www.comdata.com
24
2012 Ceridian Corporation. All rights reserved.