3 Card Payment Solutions Charge CardsPurchase CardsCommercial Cards (“One Card”)Purchasing / T&E / sometimes FleetDeclining BalanceGhostVirtual – Single UseAll are Complementary Payment Solutions…
4 Market Trends Growth! Why? Sustained demand Trickle down effect Ernst & Young2010 ProjectionsCoin & Currency+ 2%Check Clearing- 7%ACH+ 2.5%P-Card+ 8%Growth!Sustained demandTrickle down effectWhy?Shared value for allTechnologyCompetitionCost and risk mgt.Comfort with cards
5 Commercial Card for Purchasing1 Commercial Card for T&E2 Market TrendsCommercial Card for Purchasing12005 – 2010Annual spend in North America grewfrom $110 billion to $176 billion2010 – 2014Projected annual spend growth ofnearly 10% annually to $255 billionCommercial Card for T&E22004 – 2009Annual spend in North America grewfrom $120 billion to $140 billion2009 – 2011Projected annual spend growth ofnearly 7% annually to $159 billion1 RPMG Research Corporation – 2010 Purchasing Card Benchmark Survey2 RPMG Research Corporation – 2009 Travel Card Benchmark Survey
6 Leveraging Commercial Cards Better articulating the business caseDriversImprove working capitalIncrease DPOCost reduction / efficiencyHow?Involve all stakeholdersIncorporate in vendor contractsEmployee educationEnforce strategic usageSupport from senior management
7 Leveraging Commercial Cards Integration in an overall payments strategyReduce / eliminate cashConvert check / ACH transactionsDistributed vs. centralized/vendor card programsTarget specific vendor paymentsHybrid applicationsSmall $ Transactions Large $ SavingsAggregate cost savings of $38 billion annually in North AmericaAverage monthly spend per card of $2,060Average number of monthly transactions per card is 7Average Transaction amount of $315RPMG Research Corporation – 2010 Purchasing Card Benchmark Survey
8 Leveraging Commercial Cards Traditional Spend CategoriesExpanding Spend CategoriesMRO – Maintenance, Repair and OperationsOffice SuppliesComputer EquipmentT&EProfessional ServicesAdvertisingITInsuranceTelecommunicationsUtilitiesOther?...
9 Macro Environment Fostering Demand CFO’s View of A/P: High Pressures for 2009Aberdeen Group: February 2009
10 Macro Environment Fostering Demand TD Bank – Corporate Finance Executive SurveyOngoing ConcernsNearly 70% of respondents said managing cash worries them the mostThe most significant risk to cash flow will be non-performing A/R (21% of respondents)Other financial challenges include interest rates (55%) and access to credit (52%)Cautious OptimismOver half (58%) expect sales to increase in 2011Almost 40% of respondents expect capital investments to increaseOnly 7% plan on reducing expenses in 2011TD Bank: Survey of corporate finance executives of middle market companies - August 2010
11 Substantial Economic Benefits Shared valueAll participants benefitMore equal distribution
12 Substantial Economic Benefits Buyer (cardholder) perspectiveElimination of the 3-way matchReduced processing costsExpedited payment cycle timesStreamlined internal processesPayment controlsEnhanced reporting and spend visibilityNegotiate mutually beneficial trade termsImprove working capitalIncreased DPO – payment floatRevenue share – rebates
13 Substantial Economic Benefits Supplier (merchant) perspectiveConvenienceReduce DSOReceive prompt paymentImprove incoming cash flowEliminate costly paper remittancesConduct a cost/benefit analysis
14 And the survey says… Commercial Card for Purchasing1 Reduce costs by 75% or $71 per purchaseReduce payment cycle times by 72%Eliminate PO and other payment/remittance docsCommercial Card for T&EReduce costs by nearly 50% or $10 per purchase2Improve discounts from travel vendors by 13%31 RPMG Research Corporation – 2010 Purchasing Card Benchmark Survey2 RPMG Research Corporation – 2004 Travel Card Benchmark Survey3 Visa and Deloitte & Touche T&E Card Study
15 And the consultant says… Most ExpensiveManual process with check $59 per transactionLeast ExpensiveProcurement Card $9 per transactionProjected Savings$50 per transactionThe Role of Procurement Cards in the Source-to-Settle Process (Accenture, June 2007)
16 Recent Developments Evolution towards automated payment integration Single Use / Virtual Cards - “pull pay”Straight-Through-Processing - “push pay”EIPP – Electronic Invoice Presentment and PaymentIntegrated outsourced payables (check, ACH, wire, card)Regulatory Changes…
17 Recent DevelopmentsSummary of changes to Federal IRS 1099 Requirements12010:No change to existing reporting requirements2011:Relief - No reporting required for payment card transactionsCheck transactions subject to the current rules2012:Expanded reporting for all transactions for check paymentsRevised withholding regulations for federal/state/large local governmentsAdditional Resources:Internal or External tax advisors1 The above is intended to provide a summary of the recent changes. It is not legal or tax advice, or a complete examination of the IRS regulations. TD Bank does not make any warranty or representation as to the completeness or accuracy of this information or assume any responsibility that may result from reliance on such information. Please consult with your independent tax professionals where advice is required.
18 Thank You! Any Questions? Neil D. McHugh, CTP VP, Commercial Card Sales ManagerCash ManagementTD Bank, America’s Most Convenient Bank2070 Chain Bridge Road, Suite 135Vienna, VA 22182Phone:Please visit for more information