Download the Presentation - Silicon Valley Bank

Turning AP into a Revenue Generator
Benefits of automated, card-based payments
June 20, 2013

Speakers
Robert O’Conner, Senior Global Treasury Advisor,
Silicon Valley Bank
Carmela Montes de Oca, Senior Product Advisor,
Silicon Valley Bank (Moderator)
Mary Rountree, Vice President, Finance,
Implantable Provider Group
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Agenda
Review current payment trends
Evolution of payment cards
Targeting new spend via virtual accounts
Client conversation with IPG
Q&A
3

Executive Summary
More organizations focusing on electronic payments
Payment costs are now key considerations
Organizations are looking to reduce cost and seek increased control
Commercial cards help in cutting operating costs, providing expanded
control and more
4

Polling Question 1
Do you currently use credit cards for indirect payables such as
system maintenance, general repair, marketing & operations
expenditures?
A. Yes
B. No

Factors Driving Electronic Payment Focus
Reduce Procure-to-Pay
Transaction Costs
65%
Maximize Rebates and
Incentives
49%
Improve Employee
Convenience
44%
Improve Employee
Productivity
38%
Reduce Procure-to-Pay
Cycle Time
25%
0% 10% 20% 30% 40% 50% 60% 70%
Source: PayStream Advisors, Electronic Payments and P-Cards Adoption Survey, Q3 2009
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Payments Landscape:
B2B Electronic Payments Continue To Grow
Current annual B2B payments in the U.S.: Approximately $17.2 trillion
57% of B2B
Payments
26% of B2B
Payments
13% of B2B
Payments
4% of B2B
Payments
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Payment Choices Have Evolved
Existing Spend Capture
Check/Wire/ACH
Expanded Spend Capture
Check/Wire/ACH
Virtual Account Numbers
Pcard
Pcard
T&E
T&E
Technology drives automation of payments
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Polling Question 2
What value do you perceive that purchasing cards can create for
your company?
A. Earn points or revenue share (rebate)
B. Save time in AP process
C. Manage cash more effectively (e.g. extend DPO)

First – A Definition
Electronic Accounts Payable (EAP) Cards
Electronic Accounts Payable (EAP) cards are “non-plastic card
accounts used to pay for invoiced goods and services (whether set
up as a rotating pool of card accounts, ghost card accounts funded
only to pay invoices from specific suppliers, or another arrangement
similar in purpose).”
Source: RPMG Research
EAP Terms:
Virtual cards
Single-use accounts
Straight through processing
Buyer-initiated payments
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Silicon Valley Bank Virtual Card - Overview
Virtual Card Numbers (VCNs)
Unique, non-plastic account numbers used for secure purchasing
Increased transaction-level control
Defined Authorization Controls for Each VCN
Number of transactions (single-or multi-use)
Transaction amount limit (exact, maximum, or
min-max range)
Validity period
Suppliers and merchant category codes
Enhanced Client-Supplied Data
Capture up to 30 client-specified data
elements with each VCN for enriched data
analysis, reconciliation, and allocation
Two Interface Options
Request website with customizable approval
workflows (Purchase Control)
Batch file interface (transAct Gateway aka:
tAG)
Secure VCN delivery to Suppliers
Sent via encrypted email to suppliers
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A Closer Look at Virtual Cards / EAP

Using Card in Accounts Payable Processing
SVB transAct Gateway enables clients to seamlessly use card payments for Accounts Payable
spend, helping to remove process inefficiencies and generate key financial benefits
Benefits
Controlled Payments,
Reduced Fraud
Streamlined
Processing
Commercial Card
Rebate Eligibility
Working Capital
Improvements
VCN Enablers
Exact Amount Control: Pay invoices to the penny,
avoiding short payments and reducing exception
processing
Set Validity Period: Defined start and end dates to track
and manage outstanding, unprocessed card payments
Single-Use: Reduced fraud and supplier misuse,
improved transaction risk management
Batch File Interface: Automated method to generate
card numbers from an ERP or AP system
Secure Delivery of Card Numbers: Encrypted email
delivery from SVB to suppliers
Enhanced Reconciliation: Capture invoice numbers,
payment reference numbers, etc. to streamline
reconciliation and reduce reliance on merchant-provided
data
Standard 16-digit account numbers: No additional
enablement or training is required for card-accepting
suppliers
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Virtual Card Numbers: Payable Process Flow
The virtual card numbers payment process flow mirrors
your existing Accounts Payable setup
Initiate
Authorize
Route
Payment
Reconcile
• You receive
invoice from
supplier
• You authorize
payment
• AP department
uploads
payment file to
card system
• Card system
generates
single-use
account
number for
each
transaction
• Card system
emails
supplier:
payment is
ready
• Supplier
securely
retrieves,
processes
payment
• Your system
imports
settlement file
and reconciles
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Supplier Benefits
Hypothetical Example
Remittance Information:
Virtual Card Number: 5563382407077635
Expiry Date (MM/YY): 07/13
CVC: 297
Cardholder Name: WestdaleWireless AP
Cardholder Address: 516 Edgewater Drive
Wakefield, MA 01880
Purchase Type: Office Supplier
Transaction Amount: $5350.00
Supplier:
ABC Supplier
Supplier Email Address: AR1@abcsuppliers.com
Email Sent:
Yes
Valid From: 6/20/13
Valid To: 7/31/13
Invoice ID: 9999000101
Invoice Description: Office supplies
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Virtual Card Number: Reporting
VCN offers additional reporting data to the standard suite of Commercial Cards transaction data,
enriching and simplifying your analysis, allocation, and reconciliation processes
Reporting
Data Analysis
Allocation
Reconciliation
GL 1 IIII
GL 2 III III
GL 3 III II II
For Each Transaction:
•Rich Commercial Card
Transaction Data
•Virtual Card Number
•Client Custom Data
Fields
Capture additional info to
enrich data analysis
Use this data to
automatically allocate to
the proper GL
Easily track matched
expired, and active
Virtual cardsMatch
transactions to payment
instructions by invoice or
ref #
Combine standard
Commercial Card
transaction data with
virtual card number and
custom data fields
Capture up to 30 custom
data fields at time of card
creation for later reporting
Create custom reports
tailored to your program
View trends, monitor
spending patterns, and
track goals of your card
program
Track requestor, reason
for purchase, meeting ID,
project ID, etc. to enrich
data analysis
Example Use: Track
actual meeting spend vs.
budget
Allocate transactions to
the correct accounting
codes and cost centers
With VCN, record
accounting codes or
requestor information at
time of payment
Automate or simplify
expense allocation
Sample custom data: GL
code, cost center
Leverage invoice,
payment reference, or
order numbers to identify
transactions
Match transactions
automatically with
purchase/invoice
documents to track
payment status
Sample custom data:
invoice number, PO
number
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Virtual Card Number: Controlled Spending
Purchase Control as a workflow purchase tool
When an employee needs to make a business purchase but does not have authorized access to a
purchasing card, Purchase Control is an ideal solution.
Step 5: With the transaction
completed, Purchase Control can
facilitate a quick and easy
reconciliation process, matching the
virtual card number, which is unique
to each transaction, in three
important places: on the approved
purchase request, online payment
receipt, and the company’s monthly
statement.
Step #5
Step #1
Step 1: Company’s system
administrator sets up spending limits
for each employee - such as a
$3,000 limit for a marketing
manager, with purchases above that
requiring approval by his or her
supervisor.
Step 4: Once approved,
Purchase Control will generate
a virtual card number. Key
transaction data that was
entered when the purchase
request was made—such as
cost center and general ledger
codes—is now attached to the
virtual card number. The virtual
card number can only be used
within the parameters of its
approval (transaction amount,
date, and vendor) providing
built-in transaction security.
Step #4
Step #3
Step #2
Step 3: Logging in to the Purchase Control
application, the supervisor can review
and approve or decline the purchase request
Step 2: The marketing
manager starts the process
by going to the Purchase
Control application and filling
out a purchase request. A
request that exceeded his or
her limit—for example, a
purchase of $4,000—would
trigger an automatic e-mail
notifying the supervisor for
that approval.
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Polling Question #3
Is your organization leveraging single use accounts to extend the
use of your purchasing card program and/or automating your
Accounts Payable department?
A. Yes
B. No

A Conversation with IPG

Implantable Provider Group (IPG) Fast Facts
Founded in 2004
Implantable Device Benefit Management Industry Leader
Grown at a 218% compounded annual rate for the past three years
Privately owned by its management team and Sequoia Capital , a Silicon Valley
based financial partner
Annual sales = approximately $50M
Mission: To provide implantable Device Benefit Management (DBM) solutions that
deliver tangible value to health plans, providers, physicians, manufacturers and
patients, which improve quality, affordability and patient access to life saving and
life enhancing implantable devices
Annual purchasing spend = $20M and approximately $3M of that is indirect spend
5500 - B2B transactions
800+ - vendors
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Implantable Provider Group: The Challenge
In order to ensure timely payments to its suppliers under the current
setup, IPG needs to make a large number of payments to a variety of
different vendors.
The company’s existing vendor set-up process for each payee is
cumbersome and inefficient. IPG would prefer a payment tool that is
both secure and more efficient as well as electronic.
The company would like to increase payments on cards, leading to
fewer check payments, reduced paper processing, improved working
capital and increased visibility into expenditures.
IPG has two major concerns about increasing its current purchasing card program:
1. Compliance/Fraud – IPG requires several approvals before releasing payments.
2. Lack of necessary data – Credit card data is missing certain key fields including
PO numbers and General Ledger information.
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Implantable Provider Group: A Focused Approach
Reduce cost through streamlined business processes
Gain greater control over discretionary expenses
Automate supplier payments
Leverage appropriate technology
Improve the company’s working capital position
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Implantable Provider Group: Execution Strategy
Reduce cost through streamlined business processes
Expense management automation
Gain greater control over discretionary expenses with the SVB
Multi Card payment solution
Purchasing
Payables
Ensure compliance to corporate policy
Automate supplier payments and reconciliation process
Reduce check disbursements
Generate cost savings through e-Payables
23

Implantable Provider Group: Execution Strategy
Automate supplier payments and reconciliation process
(continued)
Executive support for the program
Implementation team
Define the execution strategy
Policy and procedures
Integrate, enroll supplier, test, pay and reconcile
Supplier enrollment campaign
Benchmark
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Implantable Provider Group: The Value
In the first three months, we have successfully enrolled over 48
suppliers and have another 20 actively engaged, representing a
total of more than $6M in annual payments
SVB provides proactive supplier enrollment support
Solid methodology and execution based on best practices
An alternative payment type to check, completely automated with
reconciliation features
Average cash flow improvement of 15+ days
Cost savings from reduced checks, bank fees, research, etc.
Triple-digit growth month-over-month
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Implantable Provider Group Lessons Learned
Ensure you have all the necessary controls and data in place to
reconcile your transactions
Start small – enroll one vendor to ensure your processes and
controls work prior to open enrollment
Consistently improve communication – often people do not fully
read or understand letters and emails.
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Questions?

Next Steps:
1. Gain top management support for payment process
transformation and partner with key players in the organization
to ensure buy-in.
2. Implement strategies to reduce reliance on checks.
3. Demonstrate the benefits that preferred suppliers will receive
from commercial card acceptance. (They can expect faster pay
and efficiency savings while you will gain control and revenue.)
4. Incorporate commercial card acceptance language into
preferred supplier contracts.
5. Institute a set of upfront spend controls (e.g., customized limits
based on cardholder, supplier or transaction size) and backend
audits.
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Robert O’Conner
Senior Global Treasury Advisor,
Silicon Valley Bank
972.455.0959
Robert O’Connor is a Senior Advisor with Silicon Valley
Bank’s Global Cash Management team. In this role, he
focuses on developing credit card and payments
solutions for clients.
Prior to joining Silicon Valley Bank, Robert was Vice
President of U.S. Commercial Product Sales at
MasterCard Worldwide. During his seven years with
MasterCard, Robert worked with many U.S. commercial
card issuers on developing their commercial card
strategies. Robert’s previous experience includes various
business development roles with U.S. Bank’s Corporate
Payment Solutions and Merrill Lynch.
29

Carmela Montes de Oca
Senior Product Advisor, Silicon
Valley Bank
(404)264-8323
Carmela Montes de Oca is a Senior Global Treasury
Advisor with Silicon Valley Bank serving corporate clients
in the Southeast and is a sales manager for the East
Coast. In this role, she is responsible for not only building
relationships but providing domestic and international
treasury management advice, products and services that
contribute to clients' continued growth and success.
Carmela joined Silicon Valley Bank in 2006, and is
focused on delivering treasury solutions for payments &
collections and information reporting. Before joining SVB,
Carmela was responsible for treasury services at other
large banking institutions.
Carmela has over 25 years of banking experience
serving clients in the commercial and technology
industries. She earned a Bachelor of Science Degree in
accounting and is a Certified Treasury Professional, a
certification granted by the Association of Financial
Professionals.
30

Mary Rountree
Mary Rountree is the Vice President, Finance, for
Implantable Provider Group. Mary has been with the
company for two years. Prior to that, she was Director of
Accounting for Foodbuy, LLC, a division of Compass
Group in the food service industry. Mary resides in the
Atlanta metro area with her family. She loves spending
time with her family on their boat and her personal hobby
is running.
Vice President, Finance,
Implantable Provider Group
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Disclaimers
This material, including without limitation the statistical information herein, is provided for
informational purposes only. The material is based in part upon information from thirdparty
sources that we believe to be reliable, but which has not been independently
verified by us and, as such, we do not represent that the information is accurate or
complete. The information should not be viewed as tax, investment, legal or other advice
nor is it to be relied on in making an investment or other decision. You should obtain
relevant and specific professional advice before making any investment decision.
Nothing relating to the material should be construed as a solicitation or offer, or
recommendation, to acquire or dispose of any investment or to engage in any other
transaction.
©2013 SVB Financial Group. All rights reserved. Silicon Valley Bank is a member of FDIC
and Federal Reserve System. SVB>, SVB>Find a way, SVB Financial Group, and
Silicon Valley Bank are registered trademark. Silicon Valley Bank and IPG are not
affiliated. 0613-0083
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