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©2014 MasterCard. Proprietary and Confidential Greg Hamilton Ethan Carr John Haville MasterCard Worldwide, Public Sector Business Development Early Payment Discounts versus Charge Card Rebates Greg Hamilton
©2014 MasterCard. Proprietary and Confidential March 13, 2014 Purchasing Cards have been used widely for over 15 years for transactions <$2500 Electronic Accounts Payable Solutions (EAP) first deployed in 2004 now making headway in public sector for transactions >$2500 Most Regional and National Banks offer competitive solutions Current Card Rebates for State Government can range from 120 to 180 bps depending upon annual spend, speed of payment, average transaction size (average 30% APR yield) Qualifying Large Ticket transactions (level 3) 40 to 80 bps Card spend is easily reported electronically and paid to Client Up to 70% of suppliers accept cards State Government and Public Sector in General Page 2 Current Landscape: Purchasing Cards
©2014 MasterCard. Proprietary and Confidential March 13, 2014 Early Payment Discounts have been used with preferred, strategic suppliers for over 40 years Negotiation between Vendor and Purchasing Dept. Typical arrangement: 2% 10 days, net 30 (36% APR yield on cash) Discount period calculated from date that acceptable invoice is received by the Buyer Most organizations have less than two to three percent of their spend with discount terms today Low to no visibility into early payment opportunities Manual process today due to lack of automation State Government and Public Sector Page 3 Current Landscape: Early Payment Discounts
©2014 MasterCard. Proprietary and Confidential March 13, 2014 Ariba-SAP Oracle Bottomline Technologies PayStream Check with your ERP provider Invoice automation works hand in hand with Discount Capture Usually pay vendor via ACH…Card possible as well Sample of Key Providers Page 4 Potential Early Payment Discount Partners
©2014 MasterCard. Proprietary and Confidential March 13, 2014 PCard in conjunction with EAP, E-Payables Leverage the MC/Visa networks of 36 million vendors worldwide Work with your Bank Issuer to analyze your vendor file and maximize your Card spend Where Card doesnt make sense, look to Discount Technology partner to help eliminate remaining checks Vendor recruitment and training is KEY to success! Must find balance between speed of payment and Card fee/Discount to your suppliers Must be something in it for the Supplier/Vendor…Faster Pay! Maximize Card Payments First Page 5 Recommended Strategies
©2014 MasterCard. Proprietary and Confidential March 13, 2014 Supports Fixed Discount Agreements: 2% 10 Net 30 Supports sliding scale Discounts for longer payments: 1% 15 Net 30 Dynamic Discounts: Real-time bids and offers Involve your Treasury/Finance team, IT, Purchasing and AP to build successful programs Provider vendor networks as high as 1.4 million participants Automating Invoices and Discount Capture Page 6 Key Discounting Features Available
©2014 MasterCard. Proprietary and Confidential March 13, 2014 Page 7 Questions Comments?
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