Early Payment Discounts versus Charge Card Rebates Greg Hamilton Early Payment Discounts versus Charge Card Rebates Greg Hamilton Ethan Carr John Haville MasterCard Worldwide, Public Sector Business Development

Current Landscape: Purchasing Cards State Government and Public Sector in General 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 March 13, 2014

Current Landscape: Early Payment Discounts State Government and Public Sector 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 March 13, 2014

Potential Early Payment Discount Partners Sample of Key Providers 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 March 13, 2014

Recommended Strategies Maximize Card Payments First 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 doesn’t 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! March 13, 2014

Key Discounting Features Available Automating Invoices and Discount Capture 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 March 13, 2014

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