Automation of business-to-business (B2B) payments continues to remain elusive. While checks are stubbornly pervasive, there is promising news in the vision for processing data and dollars among business partners. This session will detail NACHA and other industry organizations’ initiatives leading the way in facilitating the move from paper instruments to electronic payments by mid-sized and smaller businesses. Learn about opportunities for electronic disruption and where financial institutions might begin to gain traction in B2B ACH payments.

1. Webinar: Opportunities and
Disruption in B2B Payments
June 18, 2015

2. Today’s Discussion…
2

3. 3
Introductions
3
Nasreen Quibria
Managing Director &
Founder
Robert Unger
Senior Director, Product
Management & Corporate
Strategic Relations
Mary Zerjav
Vice President,
Senior Product
Manager
3

4. State of the Market in B2B Payments
4
Primary Payment Methods
50% -60%
of businesses
receive and pay
with checks
Source: 2013 AFP Electronic
Payments Survey + 2012
Federal Reserve Electronic
Payments & Remittance
Data Survey
8%
3%
3%
26%
60%
0% 10% 20% 30% 40% 50% 60% 70%
Don't know
Other
Mainly card
Mainly ACH
Mainly check
SOURCE: "Electronic Payments & Remittance Data: Pain Points & Solutions," Federal Reserve Banks
(Remittance Coalition), 2012
+ 2015 AFP Payments Fraud and Control Survey
77% of companies
are target of check
fraud

5. 5
The Paper Chase in A/P Operations
Hidden Costs Opportunity Costs
› Overlooked costs of checks: long‐term storage fees
(onsite and / or offsite), bank fees, reissuance fees,
etc.
› Productivity / Efficiency – data processing errors;
time consumption e.g., duplicate work, investigation
into errors, reprocessing payments, missed deadlines
› Lack of visibility audit issues
› Improved cash cycles – cost of not knowing
outstanding invoices
› Missed early payment discounts
› Expertise refocused in other areas

6. 6
Difficult to obtain banking
information for suppliers and
sharing banking information
with customers
Reasons Cited for the Paper Jam
Small to midsize business
partners do not have the
resources to adopt e-
solutions. We're looking
into solutions to assist
[them with] automation
Internal constraints
- resources, both IT
and finance, to
devote to
implementation of
new methods
It [check] isn’t
broken
Source: Nasreen Quibria, “Global Payments,”
Aberdeen Group, May 2010

7. Roadblocks to e-Payments
7
22%
24%
26%
28%
34%
44%
0% 10% 20% 30% 40% 50%
Loss of check float
Lack of integration between electronic
payment and A/P systems
Satisfaction with checks; no need to
convert to ePayments
Supplier resistance to providing bank
account information
Shortage of IT resources
Suppliers not willing to adopt electronic
payments
Source: Electronic Supplier Payments Report, PayStream Advisors, Q1 2015
Barriers to Electronic B2B Payments Adoption

8. ACH is the Most Loved Payment Type!
8
22%
34%
23%
38%
42%
36%
39%
42%
28%
54%
7%
22%
19%
34%
13%
19%
18%
15%
36%
25%
71%
18%
17%
9%
9%
13%
15%
19%
6%
4%
International payments
Better fraud protection ability
Duplicate payment avoidance
Better working capital management
Ease of integration with A/P system
Better / complete remittance information
Supplier acceptance
Better data security
Convenience; ease of use
Less costly
Wire P-Card ACH
54%
of businesses
consider ACH
payments to be
less costly
Source: Electronic Supplier Payments Report, PayStream Advisors, 2015
ACH

9. © 2015 NACHA — The Electronic Payments Association. All rights reserved.
No part of this material may be used without the prior written permission of NACHA. This material is not
intended to provide any warranties or legal advice and is intended for educational purposes only.
9
Case Study
ACH Debit Payments Enhance Customer Service & Build Loyalty
Small business customers faced:
• Having cash or check on hand
• Additional fees for COD services
• Business flow interruption, including
shipment delay risk
• Offer an ACH payment option (debit or “pull
payment”) and incentive of 1-2% discount
based on payment date for customers
• More efficient payables for customers
• Incentives made happier customers
• Faster settlement than checks
• Lower costs versus credit card acceptance
Challenge
Results / Benefits
Approach
Wayne D. Gray
Vice President
KHS Bicycles
Our goal is to offer the best customer
service to our customers, and ACH
helped us do that.

10. 10
Some Promising Shifts in Trends
Source: Nasreen Quibria, “Global Payments,” Aberdeen Group, May 2010 Source: “Electronic Supplier Payments Report,” PayStream Advisors,
Q1 2015
11%
43%
45%
59%
57%
11%
9%
5%
32%
46%
46%
36%
0% 20% 40% 60% 80% 100%
Paper Checks
Wire Transfers
Commercial Cards
ACH
Increased Decreased Stayed the Same
Then… Now…
5%
18%
53%
73%
72%
8%
6%
3%
23%
74%
41%
23%
0% 20% 40% 60% 80% 100%
Paper Checks
Wire Transfers
P-Cards
ACH
Increased Decreased Stayed the Same
ePayments
Rising!

11. 11
Payment
Method
Average cost
per transaction*
Wire transfer $9.86
Paper check $7.15
ACH $4.72
Commercial
card
$3.96
Timing
Settlement
Speed
Remittance
Data
Risk
Immediate Immediate
Primarily
manual
(email, fax)
› Final
(irrevocable)
› Low
Determined
by buyer
Varies
Complete via
paper - manual
› Bounced check
› High
Scheduled
by buyer
1-2 days (batch)
Primarily
manual
(email, fax)
› NSF
› Low
At time of
purchase
24-48 hours (batch)
(real-time
authorization)
Electronic
delivery - L2, L3
data
› Chargeback
› Moderate
Source: Nasreen Quibria, “Global Payments,”
Aberdeen Group, May 2010
Finding the Optimal Payments Mix
*NOTE: A/P all-in cost from invoice processing to
settlement
Speed Accuracy Visibility Efficiency
Accounts Payable Finance Operation (A/R and A/P)

12. 12 Information Classification: Confidential
Steps to Optimizing A/P Electronic Payments
1. Calculate all processing costs
2. Implement robust processes for managing banking information
3. Create tool to track key suppliers and progress
4. Segment and prioritize targeted suppliers (e.g. high volume invoices,
high $ value or high pain processing)
5. Launch campaign with targeted parties: mail, telephone, and email
6. Analyze the results – quantify the savings / efficiencies
12

13. 13 Information Classification: Confidential
Steps to Optimizing A/R Electronic Payments
1. Calculate all processing costs
2. Ensure your bill is clear and identifies key payment information
3. Create clear and simple remittance instructions to provide to clients
(include acceptable payment types, bank instructions, key remittance fields)
4. Create tool to track key clients and progress
5. Segment and prioritize targeted customers (e.g. high volume
invoices, high $ value or high pain processing)
6. Launch campaign with targeted parties: mail, telephone, and email
7. Consider discounts for preferred payment type
8. Analyze the results – quantify the savings / efficiencies
13

14. 14 Information Classification: Confidential
Corporate Toolbox
14
HIGH
HIGH
Cost
Savings
Early
Payment
Discounts
Rebates
A VARIETY OF SOLUTIONS
Level of
Automation
Strategic Importance
$ Ticket
Size
Dynamic
Discounting
• Solicit electronic
payments with each
new supplier /
customer
• One time / ongoing
campaigns
• Identify third parties
that can increase
electronic payments for
A/P
– Rebates via card or
supplier pay models

15. © 2015 NACHA — The Electronic Payments Association. All rights reserved.
No part of this material may be used without the prior written permission of NACHA. This material is not
intended to provide any warranties or legal advice and is intended for educational purposes only.
15
Spotlight on ACH Rebates
Next Big Thing in ACH
ACH Rebates and
Rewards
 Applies same economic
model as pcard (AP gets
rebate/reward)
 Discount rate is less
than card (and is often
negotiable)
 Supported by several AP
networks/providers
 Credit payment
 Can provide enriched
remittance data

16. 16
65%
of businesses
handle
international
payments via wire
transfers
1%
1%
2%
3%
5%
10%
13%
65%
4%
1%
1%
4%
6%
8%
10%
66%
Other
Local disbursements (Giro, post office, etc.)
Purchasing cards
SEPA payments
Paper checks
Cross-border ACH / IAT
Treasury operations in local countries
Wire transfers
Receive Payments Send Payments
SOURCE: 2013 AFP Electronic Payments Survey
Ripe for Change – Cross Border Payments
Primary Method for International Payments

17. © 2015 NACHA — The Electronic Payments Association. All rights reserved.
No part of this material may be used without the prior written permission of NACHA. This material is not
intended to provide any warranties or legal advice and is intended for educational purposes only.
17
Case Study
International ACH Payments Easing Payment Pain Point
Making international payroll payments with
money transfer services caused:
• Monthly headaches, including backlogged
money transfer service desks each month
• Risk of theft by recipients (contractors)
• Propio found a participating FedACH
financial institution, Brotherhood Bank &
Trust
• Originates payments via a web browser
• Increased efficiency
• Critical business met
• Contractors no longer need to go to money
transfer locations
Challenge
Results / Benefits
Approach
Doug Judd
Partner, Finance and Operations
Propio Language Services
International ACH saved our company!

18. 18
74%
of businesses
deliver remittance
information via
email
Battling Manual Processes
SOURCE: 2013 AFP Electronic Payments Survey
3%
6%
6%
10%
15%
18%
37%
74%
Other
Customer's website
Organization's website
Third-party website
Fax
Regular mail
EDI / CTX transmission
Email
Businesses Method of Sending Remittance Information

19. 19 Information Classification: Confidential
Electronic Invoice Presentment & Payment
(EIPP) Models
19
• Supplier controls customer
data and experience
• Enables cross-sell/
marketing
• Allows customers to
initiate payment online
• Provides opportunity for
more predictable cash
flow, and improved cash
flow forecasting
• Reduced DSO
• Offers potential for
automated AR update
• Low implementation costs
• Supplier may offer
incentives to enroll
• Supplier responsible for all
start-up and operational costs
• Must convince payers to
participate
• May have integration issues
with payers’ AP
BENEFITS
Supplier
Buyer
CHALLENGES
SELLER (Supplier)
DIRECT
• Enhances dispute
functionality
• Can automate review,
routing, and approval
• Payer must access many
supplier websites
• AP integration
• Compliance with supplier
payment options

20. 20 Information Classification: Confidential
Electronic Invoice Presentment & Payment
(EIPP) Models
20
• Provides opportunity for
more predictable cash
flow, and improved
forecasting
• Reduced DSO
• Seller may need to send
data to many buyer
websites
• Must integrate AR
• Compliance with buyer
payment options
• Requires process change
or programming for the
Seller
BENEFITS
Supplier
Buyer
CHALLENGES
• Buyer controls EIPP
application
• Ability to integrate internal
systems – notably AP
• Automates review, routing,
and approval
• Enhances dispute
functionality
• Buyer is responsible for
most costs
• Must convince sellers to
participate
BUYER (Payer)
DIRECT

21. 21 Information Classification: Confidential
Electronic Invoice Presentment & Payment
(EIPP) Models
21
• Reduces number of
trading partner sites
• Leverages shared
infrastructure, common
processes and services
• Seller can present
electronically with minimal
resources
• Automates review, routing,
and approval
• Enhances dispute
functionality
• Provides opportunity for
more predictable cash
flow, reduced DSO, and
improved forecasting
• Potential for automated
AR/AP update
• Must convince trading
partners to participate
• Compliance with
consolidator enrollment,
presentment and
(potentially) payment
processes
• Integration of AR/AP with
consolidator
• Non electronic invoices
BENEFITS
Supplier
Buyer
CHALLENGES
CONSOLIDATOR

22. © 2015 NACHA — The Electronic Payments Association. All rights reserved.
No part of this material may be used without the prior written permission of NACHA. This material is not
intended to provide any warranties or legal advice and is intended for educational purposes only.
22
What Works - Promotion at On-Boarding
Three-quarters market electronic payments at the time of new customer
enrollment.
Q65- Do you market to one-time electronic payment
customers to try and get them on-boarded for
electronic payment?
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Up to $10MM $10MM to
$500MM
Over $500MM
91%
82%
65%
10%
18%
35%
Market During Onboarding
Yes
No
Bill messages, new customer
letters, offer through new service,
online push. - Municipal
A new welcome package for new
accounts. Utility
New customer brochure, website,
customer contact representative
contact with customer, bill
messaging. - Utility

23. © 2015 NACHA — The Electronic Payments Association. All rights reserved.
No part of this material may be used without the prior written permission of NACHA. This material is not
intended to provide any warranties or legal advice and is intended for educational purposes only.
23
Low Cost Opportunity – The Phone
Prioritize/segment (e.g. focus on large volume check and card payers)
“The whole
credit/receivables
department picked
up the phones for 2
days to help with
outreach.”
“We held a contest with sales staff,
focusing on promoting ACH to small
business customers.”
“During collection calls we talk
about using ACH to avoid delays
and to improve credit ratings
and how much more convenient
it is compared to checks.”
“Our company has an FTE (and interns)
devoted to onboarding buyers, and we
use this position as an entry level
position in the company – with success
they move into other area after several
months.”
“Our hold message
promotes the benefits
of ACH.”

24. © 2015 NACHA — The Electronic Payments Association. All rights reserved.
No part of this material may be used without the prior written permission of NACHA. This material is not
intended to provide any warranties or legal advice and is intended for educational purposes only.
24
Low Cost Opportunity – The Invoice
• Design the invoice to steer buyers to
your website portal and other preferred
payment methods
– Offer ACH debit option
– Be sure to pre-fill screens
– Use banner ads
• Provide instructions on how to pay via
ACH (credit)
– including your RT/account, website
portal URL, and how to pay
electronically through 3rd party partners
(and how to provide remittance)
• Getting customers on e-invoices
increases electronic payments – they
get invoices earlier and often pay
earlier

25. © 2015 NACHA — The Electronic Payments Association. All rights reserved.
No part of this material may be used without the prior written permission of NACHA. This material is not
intended to provide any warranties or legal advice and is intended for educational purposes only.
25
Investing to Change Customer Payment Behavior
• Offer incentives (e.g., discount or extended DSO/float
time) to pay via ACH
• Compensate sales staff for “selling” ACH payment
• Require new buyers to pay via ACH
• Decrease – or retract - early pay discount with check
and card payments
• Partner with financial institutions, payment
vendors and related third parties

26. 26
Thank You – Questions?...
Nasreen Quibria | Founder
nasreen.quibria@qinsights.net
(m) 617.388.6207
Robert Unger | Senior Director
runger@nacha.org
(m) 703.561.3913
Mary Zerjav| Vice President
mary.zerjav@bnymellon.com
(o) 412.236.6044

27. • NACHA:
http://electronicpayments.org/small-business
• Remittance Coalition:
https://www.minneapolisfed.org/about/what-we-do/payments-information/remittance-
coalition
• Association for Financial Professionals (AFP)
http://www.afponline.org/
• Credit Research Foundation (CRF)
http://www.crfonline.org/aboutcrf/experience.asp
• The Institute of Financial Operations (IFO)
http://www.financialops.org/
• NAPCP (Purchasing Card)
http://www.napcp.org/
Appendix – B2B Resources