Unlocking the Power of Automation in AP Processes

Announcer  00:13

Well, welcome everyone to today’s webinar on Unlocking the Power of Automation in AP Processes. This is Brian from Strategic Treasurer. And we’re pleased you could join us as we discuss the impact that automation can have on the accounts payable process. But before I introduce today’s speakers, I have just a few quick announcements. Zoom offers several different ways for us to interact today. If you’d like to post comments or questions viewable by all attendees, please use the chat icon in the toolbar. If you would like to ask your question to just the presenters, please use the q&a icon in the toolbar. You can ask your questions at any time during the presentation, and we’ll try to get to as many as we can. But if we don’t get to your question, someone from our team will gladly follow up with you. There will also be a few polling questions throughout today’s webinar, where you’ll be able to select your response from a list of multiple choices. You will need to click the submit button on the polling questions to have your response recorded. If you’re here for CPE credits, you will need to answer at least three polls today. And last, please ensure that your resume display name includes both your first and last name, so we’ll know to whom we should send the credits. Our speakers for today are Mark Penserini, Vice President of partner management at Corpay. And Craig Jeffery, Founder and Managing Partner of Strategic Treasurer. Welcome Mark and Craig. And I’ll now turn the presentation over to you.

 

Craig Jeffery  02:00

Thanks so much, Brian. Welcome, everyone. It’s good to have you join us. Mark, I am glad to be doing another webinar with you. I don’t know how many we’ve done together. But it’s been a lot. And it’s been fun.

 

Mark Penserini  02:13

It is fun. I always enjoy it. You know, what I really love to is when this thing starts. Your guests are the best because they’re all hello from Connecticut. And hello from South Carolina, and hello from Florida. They’re all very interactive in this whole thing, which makes it a lot of fun. You don’t see that a lot. So it’s always fun to do these with you.

 

Craig Jeffery  02:32

Awesome, awesome. So maybe we should have people put in their UTM coordinates instead of the city state. So we have to, we have to figure it out that way. But awesome. There is a there’s a lot to cover today. It’s a, you know, the unlocking the power of automation AP. I know there’s a lot of people in the AP space from the controllers group and from Treasury. What are we going to cover today? Well, here is our agenda. So the aims of AP, and we’ll look at those first. So these are things about automation, scalability, control, efficiency, and more. So we’ll talk about some of those. This is what you and your peers are looking at in the world of AP, and AP as part of the cash conversion cycle, vital to every organization. The second area that we’ll talk about is about processes and views. So, you know, anytime we have a mind to improve the process, to make things more efficient, more secure, more scalable, less defects, etc, there’s a couple of things that are important one is we look at the entire process, from an end to end view as opposed to an isolated component of it. We can never achieve all that we hope in a process without looking broadly. This is useful for life. It’s useful for all business processes. It certainly fits into the AP world because one organization’s AP is someone else’s receivables is someone else’s use of capital. So we’ll look at that that end to end view, why that matters. The time and quality section, subtitle is effects of manual versus automated processes. So we’ll explore why manual processes because there’s handoffs, there are more defects because there’s more issues with those handoffs, it’s impossible to get Six Sigma quality or high quality because there’s too many too many issues. So automating items are essential for high quality, but it’s it’s more important than just automating there’s looking at the entire process. There’s a an element of what information is transported how do we make it so that there’s less involvement more things are straight through then because we’re strategic treasures big on Treasury and and Mark is is Well, we’ll look at forecasts and working capital management, there’s a, there’s a direct link and AP and an AR, to how well we forecasts and that forecasting and accurate forecasting, leads to better capital utilization. And it fits into the domain of managing working capital and the broader category of liquidity management. So we’ll look and see how those touch points matter. And I love talking about fraud, it happens to almost every company that they’re subject to fraud, different types of spoof and theft payments are involved. And that’s why criminals go after payments, because there’s an opportunity to steal funds. So how do we reduce the opportunities for fraud, from efficient processes, to reduction in the areas where attacks can take place? Those are all vital as we think about all of the aims of AP. And then finally, we do have a few key takeaways, four key takeaways to guide your thinking at the end of the discussion to reinforce what we spoke about. So that’s, that’s our agenda for today. Mark, and I have a lot to cover. And as Brian had mentioned, we do have poll questions. So we’re looking forward to that as well. Mark, why don’t you start us off with some of the top goals and AP automation? I know, restricting it to eight is, you know, is limiting, but those are some of the top ones here.

 

Mark Penserini  06:29

Yeah, I, you know, understanding what it really means to have a digital process, right? What I think this all goes back to what what is what are your goals as a customer as a, as an end user, as a company when it comes to AP automation? Right? How do you define that? Because everybody defines that a little differently. But then understanding Well, well, you know, what are your pain points? What does that digital process need to look like for you, right? And then, you know, how do we simplify that workflow? Because probably today, you’ve got a manual process? Well, if you’re gonna move away from that manual process, and you’re going to digitize that, or digitize that flow, what does that look like? How do you leverage technology to do that for you, and, you know, establish controls around that, which then leads to hopefully, cost effectiveness, right, I’m reducing the amount of processes that I’m having to deal with and having to manage. So I’ve got the ability now to scale in a lot of ways that I couldn’t scale before without actually adding people or adding staff to do these things. So hopefully, this process does help you become more cost effective. And maybe that’s one of your goals. And all of this, again, the other one there, scalability, just your ability to grow. And not always going, okay, when I reached this level, I gotta hire another FTE or when I do this, this means I gotta move staff or I’ve got to do something different. But How scalable is this product? Or How scalable is this AP automation solution that I want to move into today. And then lastly, is, as you brought up, Craig, that last piece is making that payment in the most secure, most efficient way possible to your vendor. Because all of that leads to stronger vendor relationships. So they’re all tied together there. And I’ll let you take some on the other side there.

 

Craig Jeffery  08:25

Thanks, Mark. I’ll just talk about a few things. On the on the top right, you see improved visibility between the payor and the pay, whoever is making the payment, whoever’s receiving it. Think about this for a moment, if you if you have a lack of visibility, you’re unsure. It’s harder to forecast, for example, what happens when you’re looking to close out your books for the end of the month, get the the activities receivables collected, you don’t have the information, you don’t know what’s coming in and you start calling all of your vendors and now you’re, I’ll say interrupting a p. So AP automation may be awesome. But if you’re not sharing information, give me visibility. Payments are being made on Thursday or Friday, let’s say before the end of this quarter, but they don’t know. They’re charged with figuring out what they’re going to have to finish out the quarter. And so there’s an interruption process, if you will. So providing better visibility throughout the process helps two groups with their forecasting. It helps reduce these extra column defects or steps caught people calling to find out what’s going on and renders renders a better process on the working capital management side. When you don’t when you can’t forecast right either on the payable side or the receivable side. There is a lower level of confidence which means you have to keep more cash available to cover your payables or receivables fluctuations. And when organizations are trying to optimize that activity, that’s a, it’s a significant deal. That’s a significant deal when interest rates are almost zero, and they’re no longer zero. So they’re having an impact on companies more now than they were a while ago, at least in terms of an attention perspective, and from a cost perspective as well. The relationship side and managing relationships across the ecosystem, from payer to receiver supplier to customer having clear visibility, understood processes, lack of defects or limited number of errors or issues, leads to better relationship management, easier way to do business, better communication, less errors and rework, it’s more efficient to operate. Those things work well. And those are, those are some of the top goals of AP automation. And certainly, certainly worthy of our attention wherever we sit in finance, according the organization. Mark, there’s a lot of impediments roadblocks to reaching these goals. And this is really a little bit more focused on the defects. So there, there’s there could be a whole set of boxes for for other impediments, like staffing, and it availability of resources. But this is really focused on the what causes defects.

 

Mark Penserini  11:35

Yeah, change management, all of that, I think is part of that. When you, you know, when you talk about the impediments to the goal, I think, first of all, you have to figure out what is the goal, right, what’s the successful end results and what you’re trying to accomplish. And breaking it down is simplistically which I hopefully will help you then figure out how you want to achieve the goal that, you know, there’s got to meet the needs of your organization or your AP department or whatever it happens to be. These are these are still pretty general, right? I mean, if you take you really look at this, simplistically, the steps in that AP automation process are you’ve got to capture the invoice, you’ve got to approve the invoice, you’ve got to authorize the payment, and you’ve got to make the payment. That’s really the simple view, right? But then when you break down, okay, these are the manual processes that are that are impeding me from my goal, I’ve got all these manual processes, I’ve got to do the data entry to get the to get the invoice into the system. And then I’ve got to hand that off to somebody else, and maybe somebody else isn’t there. So then it’s got to go to someone else. So I mean, it’s just that, again, poorly designed process. All of those things are what you’re trying to hopefully change to get to whatever your successful end result is. And again, the process is probably pretty limited, just because of the manual flows that you have built into this. We’ve seen this a lot. And it was really, and I think we’ve talked about this, Craig on other ones, a lot of this got magnified a lot during the pandemic, right. I mean, it’s one thing when you’re all sitting in a room together, and you can kind of pass invoices back and forth, or you know, somebody fat fingers, someone, you catch it, and you can go back and change it real quick. Well, if if you’re working in more of a hybrid model, or you’re working more now in this, you know, remote model, it, it just magnifies how broken some of these processes can be and how poorly designed they are, which opened yourself up. And you talked about this earlier, the poor design is really where fraud happens. And internal fraud is on the rise. And when I started my career, I won’t even tell you how many years ago I was, I was in the accounting department, an auditing firm. And my whole job was to go in and do internal audits for internal fraud cases. And that I think kind of started to die down. But honestly today, with everything that’s gone on, we’re starting to see more and more internal employee fraud coming out of the AP department because again, poorly designed processes, no clear change management flow, those are starting to raise their ugly head and, and just cause these impediments to really reaching your end goal.

 

Craig Jeffery  14:33

So Oh, yeah, I was just I was just going to mention, you know, this the raising their ugly head that those awesome comment, right it’s, it’s very visual. But But yeah, this is Yeah, talk us through this this chart. There’s the segmented siloed view at the top and the end to end view at the bottom. That was.

 

Mark Penserini  14:57

Yeah, yeah, again, I mean, when you look at you know, if you just really try and simplify this, which, for me it’s easier, right? Maybe I’m older and slower. So I need to simplify, right? But when you look at, okay, I’ve got invoice capture, right now how am I doing that today? Are these coming in mail? Are they coming in email are they coming in fax, whatever it happens to be, you’ve got this siloed process on the front end of this where you’ve got to capture the invoice. And then you’ve got to code it right, you’ve got to get it into your system, you got to get it tied to a GL, if you’re using POS, you’ve got to, you’ve got to match those up. So you’ve got kind of this broken piece and the very front end, which really can start and that’s how fraud can start right there. Because things can be manipulated, not necessarily in a good way, right. But then you’ve got to go through the invoice approval process. And that’s typically again, another side loop process. So there’s no connection between the two. Eventually, you get to Payment Authorization, and then you get to execution. Which means now I’m going to push that over to the accounts receivable side. Now the now the issue becomes the AR person’s getting this and they’re like, Well, what am I getting paid for? You know, and and they’ve got to try and figure that out and balance that. And it just, it just kind of snowballs that whole process of being siloed. And not really having a true end to end view, which again, I think when you when you start to look at how do I want to utilize AP automation, what is AP automation mean to me? What does that successful end result look like? Start with that, and then work your way backwards? Well, for me, it’s the it’s the bottom slide here, right? There is no broken process, you’re able to see that invoice come in, do whatever. You know, whatever coding has to be done, whatever validation between the PO and the invoice, and what’s been approved, all of that’s flowing all the way through, and then that same information is being pushed through the payment process over to AR so they can finish their side without having to stop and start and go, Why am I getting this or, you know, this isn’t the amount that I was expecting. And you know, all of that happens. So I just feel like you can if you can reduce those defects, you’re gonna save a lot of time, you’re gonna eliminate these one offs that you’re constantly having to deal with. And like you said earlier, a lot of this comes back to your relationship with your vendors, vendors have a lot more choices today. And they’re looking for customers that are going to work smoothly with them. And they’re also going to pay on time, because like you said, cashflow is king as well. So anytime this, anytime the system is broken, or this process is broken between the two, that slows down the cache, and nobody wants her cache slowed down, they want it sooner rather than later. So for me, the goal is get away from the top box, move yourself in the bottom box, simplify it as much as you can, always understanding that you’re there’s a piece of change management that really needs to be part of this flow as you move into this world.

 

Craig Jeffery  18:07

Excellent. Thanks, Mark. So our first poll question is now hopefully appearing on one of your many screens. This is a select all that apply. And the question is, what forms of payment Do you accept, I always find it interesting. Who’s on the who’s on the call, who’s accepting different payment types, you know, ghost card, faster instant payments, virtual card, physical card, check, wire, ACH, including other category. So let’s just see how broad the list of various options are there are available. Now. After you select all the options that apply, hit submit. And then there’s an opportunity in the chat box to type the word core pay. If you’d like the results of the whole questions that we have, we’ll send them to everybody if we get enough responses. And I’ll just pick 150. That’s a small percentage of everybody who’s on today’s webinar. So if you type the word, Corpay, if you type the word poll that still counts, but yeah, just just a good way to reinforce everything that’s going on. I see some people are typing in both for extra credit. That’s good. That will come in handy. So 150 So now I’ve given Brian something to do. Mark, you know, ACH and wire and check dominating right now 92 to 95% physical card virtual cards had about half faster and instant payments over quarter ghost card, about one in six. And then other we don’t have details on what that is in He comments here on the breadth of some of the newer newer payment methods.

 

Mark Penserini  20:05

Yeah, I mean, I think, you know, check is check his check, right, it’s never gonna go away, it’s always gonna be up there because everybody’s always going to accept check. Although we’re starting to see more vendors say, Listen, I’m not going to take a cheque because I don’t want to have to deal with it, I don’t want to deposit it, I want to wait for it to clear. So you’re gonna have to either ACH me or wire me or use some kind of a card. We are seeing that faster instant payments is starting to rise and giving our vendors and opportunity to make that choice. I think it’s very important as we as we hopefully move into the, you know, the 21st century here on some of this, I’m amazed at how many checks are still being written daily for vendor payments. It amazes me does not surprise me that ACH and wire RS they’re as big as they are as fat, you know, as heavy as they are just because of how quickly how quickly those funds can hit your your vendors account. And like I said, cash flow is king, you’re you’re they want their money as fast as possible.

 

Craig Jeffery  21:10

Yeah, thanks for those comments. Now. Brian has placed for your consideration to company pages on LinkedIn Corpay and Strategic Treasurer Marks company, my company if you would be so kind as to make sure you’re following Corpay and Strategic Treasurer, that would be most awesome. So feel free to click on it and follow it we’ve got we’ve got plenty more to talk about. But that is very, very helpful on our side. If you do follow that way, we can stay connected in different ways. I am also told by Brian that we 53 more people to type the word poll or Corpay. So we got less than 100 with my first harangue of everybody for that. So I guess about numbers jumping down quickly. Yeah, if you’re typing in the chat box, that’s probably better than the q&a section. So there we go. All right. So what are the defects due to a silo view, and we have a limited view, we care about our part of the process and not the other. And if you look at the quote on the bottom, this is this is one that’s a fairly popular business quote, it’s one I say, probably to the point of consternation for everybody in the offices, optimizing part of the process, sub optimizes the hole and Mark showed you the top fragmented approach where every piece is like, hey, what’s the best way to do this, this this? And then the bottom way of looking across from an end to end view, you can see how that could be the case, like, do I need to send all the information? I don’t care? I’m just making a payment? Let let AR figure it out. Right? Or don’t consider who’s upstream or downstream. So here’s the here’s the story, right? I receive some some funds, what are you paying for these invoices, right? These are all exception conversations. It’s a phone call, an email, or some other method. Here’s the five invoices I’m paying for. Those don’t add up the amount you sent in, oh, we short paid one of those invoices by a certain amount of dollars, because color was wrong count was off whatever the reason was, we felt like, and then it’s like, oh, okay, thanks. And we ended the conversation quickly, there could be our shipping document says you received everything or whatever the whatever the issue is. But that’s one of the issues. Now, if information is not flowing with the payment, for example, or the you know, the order information is being repeated, and therefore errors happen. And so defects come as a result of that. Defects mean, all items are shipped. And this case, details about what’s being paid for. So an AP process relates to AR, because if they don’t know how to apply it, they’re going to reach out to you on an exception basis. And usually, that’s a multiple part conversation. very ineffective. It costs both parties time. And the more you can make dealing with your partner easy, the better it is for both the buyer and the seller. And that’s the value of the comprehensive view the end to end view. Let’s look at instead of a silo view, look at it from an end to end perspective. Yeah, we can think about examples and stories of this all the time. And the more you make it costly to do business, the more you’re ultimately going to be paying for things on both sides. There’s there’s a larger cost to it. All right. Now, Mark. This is this is another example for you to clear up. This looks like an electrical schematic, but it’s showing differences between manual and automated processes. So walk us through this if you Good.

 

Mark Penserini  25:01

Yeah, I mean, the, you know, we use this term a lot. But and I still like it because it’s, it’s all about the operational efficiencies, right, what you’re trying to get to, is an efficient process, which is, again, at the bottom, the automated process. But when you look at, what are you solving for, again, on this manual load or manual process on the top one, you know, you’ve got, first of all, you’ve got to get those invoices in, and then there’s probably some type of manual data entry that has to happen. So somebody’s sitting down and keen data off of a piece of paper to get that into your system, and then hopefully, getting it correct. And then that’s got to move along to the next person who’s who’s going to do it, either review it, or they’re going to add to it in order to code it properly. Or maybe they’re doing some kind of two way match or three way match. If you’re utilizing purchase orders or whatever it happens to be within that system, you know, before it can move along to the next one. And then eventually, you finally get to the end here, right? So it just becomes this very cumbersome process and who you know, who’s got to authorize the invoice as opposed to who’s got to authorize the payment. And you’ve just got more and more steps more and more people. And if some drawing you can see how some of these lines go back. Right? So now you excuse me, you’re actually moving backwards. Because it’s like, something’s wrong with this invoice, I can’t pay it. So it’s got to go back to the beginning. And you got to start all over again. So you know, it’s just this vicious cycle you’re in. And what happens then is your inability to really manage this and eliminate like, we talked about fraud, but you’re also you’re also struggling with pain on time. Right? Again, vendor relationships are strained today, they’re important for all of us, you know, with all the supply chain issues we’ve had. And it’s very important that those vendors feel like they’re being taken care of. So to Craig’s point, having that long term view, which is just not about your own process, but it’s what happens after the payment leaves your house and goes to the vendors house, right? And what are they doing with it? And how can you help them move along their process as well. So, again, you’ve got all these manual steps to too many opportunities for one defects, too many opportunities for late fees and late payments, because you’re missing, you’re missing the opportunity for early pay potentially, right, which again, goes into, you know, when you’re trying to manage your cash flow, and manage funds, knowing when you want to pay your vendors. And those those early pay early pays can be a huge piece of your business. So understanding that, and what the what the vendor is willing to do with you on early pays, and that kind of thing become very important. And if you miss it by a day you miss it. So all of that just impacts that manual process, when you can get down again, where that flow is seamless, right? Where you’ve simplified your workflow, your leverage, leveraging the technology. And that’s the thing today, Craig, there’s so much technology available out there today. In some ways, it’s almost overwhelming, because there is so many choices, right? And that’s where I mean, I think you’ve really got to figure out what’s the successful end result look like to you into your organization to understand what technology do I want to utilize, but you’re really trying to leverage that, that technology, establish control controls, and eliminate fraud, which are eliminating those points of failure and reducing the opportunities for defects. So when that flows completely through and then out the door to your vendor, it becomes very seamless, and it’s much more manageable, right? You’ve you’ve you don’t have these lines back and forth, you don’t need all those lines back and forth. So you’ve been able to make that flow much more seamless. And I think ideally, you know, everybody goes, Oh, I’ve got controls, because it’s a manual process. Well, what we’re seeing is maybe those controls aren’t as as robust or as strong as they could be. Where by leveraging the technology, you can actually add more controls and more management into your AP process, which ultimately gives you more control over your dollars. And that’s what you’re really trying to do. You’re trying to make sure that you’re managing your dollars as properly and its most efficiently as you possibly can and providing the operational efficiencies to your staff to be able to focus on other things.

 

Craig Jeffery  29:46

You know, Mark, when you were describing the controls there, you were, I think some of the cyber cyber fraud people would say you reducing the surface area of attack, right? So it’s like, hey, there’s there’s not a place to commit fraud here or to steal data. So you reduce the places of points of exposure. The other the other piece, too, when you look at the handoffs on the top section, and I’ve seen this a company’s, you’ve probably seen it. In hundreds of companies, whenever there’s a handoff. And there’s been some type of quality control issue, you might find some sort of log or some receding process to say, here’s the data, here’s the quality control, it’s really a, how can I point the blame away from me processes a whole extra process designed to point blame for defects somewhere else? That’s, that’s always been surprising to me how much of that goes on? Because the process is manual? How do we, how do we determine what the cause is and instead of fixing it with automation, and straight through processing, we, we add another layer of of action that adds to it. The other the other two parts? I didn’t remember if you had mentioned the level of quality, but when you look at level of sigma, what quality ratio can you get? You can only reach you know, five or six sigma, or four or five or six sigma, if you have an automated process that’s designed well, if you have a manual process, and you put the best people on it, and you’ve got it as tight as you can manually, the most I think you can possibly achieve is three sigma. So it’s you’re going to have more defects, right? You just why? Short sheet your own bed? Or why make it by tie your shoes together. When you’re in a race. Let’s make it so that there’s a greatest opportunity. So really appreciate your comments there, Mark. All right. And a lot of people were wondering, where is our next poll question. I want to answer your thing. So we talked about fraud, what controls does your organization use or employ to defend against fraud, positive payment, that’s for checks, Ach, like electronic pre authorization, some sort of like digital positive pay tokenization, where you replace, let’s say, an account number with a digital token, that is then mapped by the system, file controls, you know, totals or hashing, this is where you have a, you know, this much money for these many items, or a digital hash, which creates a mathematical total for all of the content, which makes it possible to make a change virtual card to use those that type of service where it’s a one time use card number for a particular charge, sometimes for a particular amount, or something else. So we’d love to, I’m looking forward to seeing what these results are. And I believe we have passed the 150 people commenting on the chat room, that’ll make Brian happy. So thank you for doing it. No need to type that in now. Everyone will get a copy. And we’ll go from there. I don’t know if I see there’s an issue with at least one person seeing the poll. Not sure if that’s just some localized incidents. So sorry for that. Mark? Yeah, your comments on this? I’ve got a few after after you take first crack.

 

Mark Penserini  33:36

Yeah, again, because checks are still so prevalent in 2023. You’ve got to have positive pay in your bank account. Right. And the other thing that’s really on the rise when it comes to fraud these days, is check fraud. You know, back in the back in the day, when I was much younger person they used to call it whitewashing, I think they kind of still do only it’s all electronic now. So the technology again for the fraudsters and their ability to steal a check that has your banking information on it, and then either change the name or change the amount or a combination of things and then get that through, even with positive pay is really on the rise. And you know, between that, and ACH, those are the two biggest fraud attempts that we see on a daily basis in our organization. Just the amount again, of business, email compromises and people coming in saying they’re the vendor and they’re really not, you know, so we just continue to see, you know, that you’ve got to be on top of all of these different fraud controls. The other thing that’s still interesting to me and I guess it really does play out in our numbers as well as about 29% use virtual card. And you mentioned this, you know, we call it a single swipe Single use card. The reason for that is it has to be swiped by the vendor for the exact amount of the invoices that a payment is and it can only be swiped once. So it really becomes one of the most secure and fastest way for a vendor to be paid in all of these fraud control measures that you have in place.

 

Craig Jeffery  35:26

Yeah, excellent. You know, as I look at this to mark, you know, the virtual card, I’m trying to think of some of the other webinars we’ve done, I don’t think we were seeing that high of a number. I know that makes you happy that there’s room to grow, you know, file controls, totals or hashing. That’s an area that I think has to grow, you know, we’re passing files, we need to, that’s what we refer to as one of the four types of reconciliation, making sure that there’s no alteration or that things are aligned. You know, and this is a good way to do it. It’s like, okay, the transaction number and dollar amount or value is, is in line perfect. But if what if someone changed banking information, and put routes into a different account, there could be some exposure there. Now, sometimes there’s hashing being done on banking information. So if there’s a change in banking information, that’s going to be alerted without hashing the entire file, and others hash the entire file, or they’re trying to run a mathematical formula, give a total and the receiving organization runs the totals and says, hey, the hash doesn’t match doesn’t match up, something’s been altered, who’s lost? Or someone was altering something? That’s an issue. So lots of things going on here on the Fraud Control side. Really appreciate each of your your input. So apt AR? What are we seen here? We have that example. That I was given before this back and forth conversation, so I’m paying the following information. And AR needs to receive it, what does AR need? What’s the value that I’m getting? I need to know what city my bank account, I get that from my bank. I need to know the details. Does that come through my banking systems that come from an email, paper in the mail? You know, a phone call, I have to guess? You know, all of that. We want to know when payments are coming? Because I’m asked for? What’s our, what’s our DSL going to be? How much are we going to collect by the end of the week, because we have to know what else we’re doing. Across the capital side of business, I want to make sure that payments are received securely, they’re not intercepted. So that’s what I care about on the right hand side. AP is like, AP knows what they’re paying. But there’s that question, is all of the detail making it? Or is it making it in a way that the other side can use it to answer their questions? In the example of ACH is the value some basic, certainly, you know, it’s whatever the payment is, or the details, emailed whether it’s sent separately, and then they have to be re associated? Do they go over with the ACH? Maybe they go over with the ACH for those who can use it have a process of matching that maybe through a lockbox provider through a service company that does it? Or is it sent both ways via ACH and email, or whatever other method is the details traveling with the value? When that occurs, then there’s a consistency. It’s not separated by time or space. The latency is reduced. I know what I’m getting paid. I know the details I can self serve or have my system, figure out those items, or I have something that’s not quite right. You know, Mark, as I look at the bottom here, this moving from manual to automated, it’s easy to say let’s move from manual to automated. Because I just said we can all say that. But there’s a number. There’s no different steps. I’m not sure what I had for lunch, but I’m feeling that I guess. So on the process side, you know, we go from manual handoffs to a combination of manual with maybe more digital to end to end straight through processing. So think about how do I move towards my end state? If I can’t get there one jump. Where can I improve the process? Remove some of those handoffs points of exposure? Detail isn’t sent. It’s sent? Maybe separately. Maybe it’s sent together with value, maybe it’s available for self service as well through a portal. What about the value? Value? Is it delayed? Is it received as a communicated early You know, when we talk about the timing and speed, Mark, you said something about, you said something earlier, basically, things need to go faster. Nobody wants stuff slower. Nobody wants to cash slower. I think it was example. Nobody wants their information slower either, right? We want we want the information so that we can prepare and know. So faster and better, is better. And security. I don’t think there’s any company on this call that would say, we’ve arrived at the security front that we need to be. It’s the the threats are there, how do we make sure things are secure, they’re encrypted, they continue to scale to meet the threat of the criminals. Mark. I didn’t know if you had anything you wanted to add here, because I know you have the next couple of slides. But if there’s something you want to add to the issues that automation can help address, I wanted to give you that opportunity.

 

Mark Penserini  40:55

Well, and the thing I really like about particularly the bottom part of this, this is normally this is a journey, right? I mean, you don’t just jump from one to the other. Because depending again, how long you’ve had your manual processes, you’re probably going to go through several stages of this to get to a point where you really do have an end in straight through processing. I mean, again, if that’s your if that’s what you’ve defined as a successful end result, the encouraging thing is, it’s available today, you can get there. And but there may be some jumps you’ve got to make along the way, as you learn. And as you change your internal processes to accommodate or adjust for this. There’s there’s a learning curve, right, there’s a learning curve for staff, there’s a learning curve for the organization, there’s probably a learning curve on the receivable side with the vendor when you change this. The other thing we are seeing though, is vendors are driving a lot of this to they’re saying, hey, I need this from you. Right, I need I need you to start to move towards me on some of this. So I don’t know that you can just sit back and keep doing the manual process that you’ve been doing. It really needs to be this journey where you start to move from manual to some type of hybrid to hopefully you get to that end to end flow. So it’s a it’s a great slide.

 

Craig Jeffery  42:15

Like, like you describe it the journey, right? It’s not instant, instant jump, in many cases, well back it back over to you, you you’ve got the floor.

 

Mark Penserini  42:29

Well, you know, like we talked about, you know, cash flow is king, understanding how you’re managing your funds, how you’re forecasting your funds flow. Obviously, your relationship with Treasury is very important in all of this. You know, and when you when you’re dealing with this manual process, you don’t know for sure when things are going to happen. And that’s I think that’s the biggest unknown that you’re trying to eliminate today. When you start to automate from from front end, the back end from the front end, you start to become very predictable. Because you know, how to schedule things better, you know, what’s coming into your system, and those are getting into your eight, your AP department and their AP can start to manage cash flow better, and when they want to make payments. Again, knowing that and then scheduling, when are those funds actually going to settle? Right? When are they going to come out of my bank account is it becomes the goal becomes part of the goal here, right? And so if you’re, again, utilizing a manual process today, you’re probably struggling with that you’re unsure, you know, how much funds do I actually have available for use before I’m going to need it to pay the AP bill, because I don’t really have all my AP bills in the system, or I’m trying to manually monitor all of that and I got them on a spreadsheet in Excel or whatever it happens to be. So it just becomes a very difficult process to deal with from an AP perspective. And then on the AR side, same thing you got to call sometimes to find out that the Casio check, when are they going to cash the check? You know, and you’re trying again, to eliminate all of these steps along the way. So you can take care of your cash flow management and improve that flow and improve your vendor relationships along the way. So you’ve now got an automated process so you’re you’re more timely in your payments you’re also uh you know, you’re also know ahead of time, what what funds you need, and when you need those funds and when those funds are going to settle and it’s not so much about I’m crossing my fingers that they don’t cash this check today. Or, or did they ever cashed a check? And you now you’re now you’re trying to balance to that or do I got to stop payment and reissue that check right it’s just a lot of this back and forth that you’re Your team’s having to deal with. And that goes back to the whole operational efficiency side of this, to where you can automate this and confidently schedule and know when payments or funds are going to hit your vendors bank account, know when they’re going to settle, and you can forecast properly. And again, avoid hopefully, late fees, lost or misplaced invoices that didn’t get paid properly, a lot of that starts to go away, that are also impacting your cash flow along the way. I always like to talk about fraud and risk, right? Everything we do today is really about how do I protect protect my money, and how do I protect my vendors mind. Because if my vendors happy, I’m going to get better service, I’m going to make sure my vendors happy, therefore, I’m gonna get the products that I need when I need them. So this all ties together. Because again, if you’re doing this manual process, you’ve got to have a lot more controls in place to ensure that funds are not being diverted or stolen internally as well as externally, right, the more the more chances for somebody to see this information or to see your banking information, or to divert that check in a different direction, you’re just you’re just more exposed, which means that you’ve got greater chance of money being stolen at some point from your account. And that’s what you’re trying to protect from. So the goal there again, is to move away from this manual process and figure out what do I have to do, again, to capture the invoice properly coded properly, get it approved properly, and then go through that process of the appropriate Payment Authorization or approval, and then ensure that the details that need to go to the vendor or going along with the payment in the most efficient and most secure way possible. So then when the receivable side gets it, the AR AR person’s very happy because they got their money, like they needed it. And they also have all the details, so they don’t have to pick up the phone and stop the process. So you know, we’ve talked about that virtual card being one of the ways where it really is the most efficient, fastest way for vendor to be paid. We also know that there’s fees involved that well, there’s fees involved with that, because that’s, that’s part of what you’re gaining. And so that just becomes part of your cash flow calculation, when you’re trying to understand that, again, ACH a very secure process. As long as you have the right controls in place. As I said ACH fraud probably gets hit by 90% of businesses today on a you know, on a pretty, pretty consistent basis. And so as long as you’ve got the right fraud controls in place to manage that banking information and ensure that those funds are going to be securely moving through not only your organization, but into your accounts receivables or your vendors accounts receivables, organization, then that’s the best way to go. Because, again, they’re going to get the cash flow, which means you’re going to have a strong relationship with your vendors, and they’re going to be very happy. So we’re all about reducing risk. We’re all about protecting funds.

 

Craig Jeffery  48:36

Excellent. Now, our last poll question I know some people are having a challenge with if you can’t see it, or if you can’t submit it, please send a note in the chat box, you could chat to Brian, or to the I guess to the speakers and hosts and panelists, that would be fine. Just to let them know that there’s a problem. So the question here is, we use the following payment types. And these are some of the more as well. Many of these are more current payment types of same day ACH that’s in the US. RTP or real time payments in the US FedNow in the US. So very US centric so far, Faster Payments, the UK, virtual cards, wherever. And then Zelle, PayPal or whatever the equivalent is in your country and others, lots of other, you know, banking, specific payment systems like Zelle where it comes right out of your account. If you have that, go ahead and and select that. And if we go to other as other payment types, it’ll be interesting to see. We have enough poll responses for pay responses. And looks like perhaps the anomaly with the poll is resolved, at least based on one one point of feedback. I think that probably some other opportunities showing up in the chat box as well. As soon as we’re ready, we’ll begin with the response. Yeah, it’s the opportunities to follow Corpay. Follow Strategic Treasurer. Please make sure you’re following, that’s awesome for us. Mark on the US side. Pretty impressive numbers for FedNow. That’s, that’s not even close to a year old.

 

Mark Penserini  50:29

Now I’m actually Yeah, I’m pretty surprised it’s that high already. But yeah, FedNow is very new still. So that’s a Yeah, that’s a pretty decent number to pretty pretty high adoption that quick that quick already.

 

Craig Jeffery  50:45

That’s, Mark, those are the kinds of people we bring to in these webinars. They’re the leaders forefront. That’s, that is that is a pretty high percentage, pretty hard copies. RTP has been out for a while it’s approaching four out of nine pretty soon approaching 50%. And then a little over three quarters you same day ch on the payment side. So that’s that’s pretty good adoption. Virtual cards, certainly room for room for growth is higher than we saw on the other question. And Sal and Pay Pal, those 25%. And nothing’s nothing. So nothing’s disappointing here. This is a good grip. I mean, not, you know, if we asked how many people have have to make payments in the UK, that number is going to be a smaller percentage, so that 13% would be a much larger percentage of those that are operating there. But we don’t know this is just a poll, we’re not doing a massive survey to show.

 

Mark Penserini  51:46

So definitely seeing a rise craigan in what we call digital wallets. Right, which would be the Zales in the papers and that kind of stuff. So push to push the debit, all that I think is part of the digital wallet or what we consider the digital wallet. So again, that 25% i That. That doesn’t surprise me, i i I would predict a year from now that number will still be even higher as as the adoption, I think within the payment automation space for digital wallets continues to grow.

 

Craig Jeffery  52:20

Excellent. Excellent. So yeah, well done, everybody. Thanks for responding to these poll questions. We have enough responses, you’ll get those answers on the appropriate page when it comes through. So thank you for that. And, Mark, I think you said you like talking about security and fraud. So this is this is a way where you can geek out and then talk more about fraud and ways of protecting ourselves.

 

Mark Penserini  52:47

Well, I’m trying to balance this because I know we’re running short on time. So I could talk all day on this. But again, I think, you know, I’m still amazed today in 2023, that the amount of checks that we we produce for our customers to go to vendor payments, it’s still shockingly high, right. And there’s just so much exposure to it today. But it’s just still one of the most common ways for vendors to be paid. When you when you look at that. And I think just knowing that the fraudsters are getting smarter technologies getting easier for them to be able to take your banking information, quite honestly, if I if I was in somebody’s shoes, today, I would find a way never to have my banking information exposed on any payment that I did. Outside of the organization, I think it’s just it’s very risky. So again, it’s ACH kind of the same way. I mean, we get so many ACH fraud attempts every day. It’s it’s just boggles my mind. And we constantly have to change our security protocols to continue to manage the amount of ACH fraud that’s out there. fraudsters are also not as selective as they used to be correct, they used to be more selective and go after the big guys, because the big guys that that are, we can steal from them, they’re not really going to care gonna lose it. So it’s not going to be that big of a deal anymore. They’re not that way. So you’ve got to be on your game all the time when you’re utilizing Ach, and if you’re managing the banking information. So that’s another area that I just encourage you if you’re doing that in house, you’ve got to constantly be changing your security protocols around that to ensure that your vendors are getting the money and the money is not going to to a bad bank account. And then obviously, we talked about virtual card. You know, we do all of those, right? I mean, it’s not like we do one or the other. But we it’s a pretty decent mix. It’s just much more difficult to steal a virtual card. Because of the way it’s secure in a way that processes with the vendor directly and the funds are the fastest way for For the funds to go into the vendors account, even faster than ACH be Whoa, no, ACH is the fastest, actually, it’s not. But, you know, all of these, I think, play a key role in in making those payments to your vendors and managing that vendor payment and vendor relationship. I think you got to be on top of your game when it comes to check and ACH anymore in today’s world.

 

Craig Jeffery  55:24

Yeah, excellent. So that brings us to our final thoughts. But before we do that, there were some questions and discussion. Josh, sent in a question said, Do you see a time when some type of routing system is built between Zelle and Venmo, PayPal, etc? What about between FedNow and RTP? I’ll say just a couple of things, very briefly here. The issue of interoperability not only between, let’s say US domestic, but on a global basis for some of these faster payment systems. This is this is a really good question that’s worthy of its own webinars. So thank you for submitting that. Sorry, we can’t give you a more opinionated, more detailed and opinionated version on that. But we’d like the way you’re thinking. And that’s a great question. Mark, why don’t you kick us off as we bring this webinar, home.

 

Mark Penserini  56:21

All righty. So yeah, manual to efficient process, everything we’ve talked about today. One, again, understand what your successful end result needs to be. And then part of that goal is to simplify your workflow. leverage the technology that’s available to you, establishes controls, understanding your handoffs is what was really going to help you establish the right controls within your organization, and eliminate that fraud, and then eliminate the defects, right? The only way you’re ever going to get to a Six Sigma, you know, process is to digitize, you can’t do it, man, there’s just no way you’ll never get there, because it has its limitations. So I think the goal continues to be we’ve got to move to more efficient, more digital processes. And then again, the automation, digital transactions, you’re going to stop all of the not just the rekeying. But a lot of times the cane itself, right, so you’re eliminating that and allowing the systems to guide the the invoice all the way through to approval, and it’s just gonna give you I think, a greater level of security, that those invoices are being processed properly, they’re being processed timely, and reduce again, those defects, reduce the amount of time that your staff is having to get involved with invoices, and having to get involved with the payment of those invoices and the questions around it. So the automation can do both, it can give you the efficiencies that you need, and create a true end to end automated process.

 

Craig Jeffery  58:03

Yeah, the end-to-end mindset, we spoke about that at length, this is looking at the entire process, fix what you can across the whole process by working with others, if they won’t work with you fix whatever component you can, that’s the only way to achieve the quality that we spoke about. And the Six Sigma level of quality that Mark reemphasize. And then finally, you heard what Mark had talked about on the security side, the threat side, the escalating success of criminals is serious and real. Its funding more their attack methods and methodologies. We have to scale our defenses and the idea of who we can eliminate the surface area of attack or the points of exposure that are exposed to attack in processes and people that’s essential. So get get your people trained on payment security. Make sure you’re reviewing your processes, not just for efficiency, but for control as well. Thank you so much, Mark, and also a big thank you to everybody who joined us. And thank you to Brian, who’s going to share a few key points as we finish exactly on time tonight.

 

Announcer  59:16

Thank you, Craig. Thank you, Mark. And thank you, everyone for joining us today. The CTP credits, today’s webinar slides, and a recording of today’s webinar will be sent to you within five business days. And for more discussion on treasury insights and news, be sure to listen to the Treasury Update Podcast by clicking the link in the chat box. Thank you and we hope you have a good rest of the day.