LINK 10 November 16 – 18, PS Financial Gateway Implementation v9.0 Use Case By Rick Gray (614)

LINK 10 November 16 – 18, AEP – Company Overview –Project Scope –FG Overview –Implementing – Bank File Loading Upgrading Bank Account Reconciliation Payment Process –Upgrading AP Electronic Payment Process –Implementing Treasury Electronic Payment Process –FG Processing Customization and Challenges –FG - “What we liked” –AEP Requests for FG –Questions Contents

LINK 10 November 16 – 18, AEP – Company Overview American Electric Power has been providing electric service for more than 100 years and is one of the nation’s largest electric utilities, serving in 11 states –Revenues $13.5 billion –Net Income$1.362 billion –Service Territory~ 200,000 Square Miles –Total Assets $45.2 billion –U.S. Customers Over 5.2 million –Employees ~ 20,000

LINK 10 November 16 – 18, Project Scope PS Modules: AP, AR/BI, GL, Treasury, Project Costing Technical Upgrade –Reapply customizations, unless no longer required –No new functionality, unless replaced customizations AP previously had custom electronic payment processes Financial Gateway replaced existing customizations FG added functionality to Treasury for electronic payments Technical Scope –Double upgrade from 8.0 -> 8.9 -> 9.0 (1.8 tera-bytes of data) –5,358 Functional Requirements 441 Customizations (Work Units) –18,204 PeopleSoft, 222 non-PeopleSoft Objects customized

LINK 10 November 16 – 18, Financial Gateway Scope Overview Banks PeopleSoft Financial Gateway PeopleSoft FCM Bank Statements (prior and current day) Electronic Payments Payment Acknowledgements Positive Pay Files (Customized) Payroll (HRM) Can Build Custom Table

LINK 10 November 16 – 18, Financial Gateway Overview Back-end Bank System Financial Gateway Treasury Management Bank Statement Table Treasury Bank Reconciliation Bank Statement Process Flow Treasury Management Cash Position Operations Accounts Receivables Posting (Not Implemented at AEP) BAI Bank Statement Files

LINK 10 November 16 – 18, AEP imports bank files from 4 banks –All 4 sources (161 accounts) have prior day bank statement file imports –Two sources (100 accounts) have current day file imports (including Fed presentments for controlled disbursement accounts). Current Day imports are hourly from 8:00AM through 3:00PM. Bank Transaction Volumes –120,000 bank transactions a month in BAI2 format –BAI2 codes are used on the import mapping into the Treasury Bank Statement Tables Customizations –None! –We did contact two banks and request some changes from the formatting we were using in the old version and they made the changes Implementing Bank File Loads

LINK 10 November 16 – 18, Bank Transaction Volumes –120,000 bank transactions per month –Reconciled 210,000 source transactions to the bank transactions –Sources include integrated AP, Other Accounts Receivable and Treasury –External sources include Payroll and Customer AR system Post Upgrade –Auto reconciliation process went from 2 hour process to ½ hour each day –96% of transactions auto-reconciled –Currently we reconcile “batch” total, we are looking to change to more detail line level based on improved performance, increasing accuracy. Upgrading Automated Bank Recon

LINK 10 November 16 – 18, Bank Reconciliation Customizations –We reduced customizations. Some reductions due to understanding the system better and others based on improved functionality. –Customizations still in place Identifying Match Groups - places an id on each transaction to easily view the transactions matched, and provides detail on how they matched (which common field(s)). Auto process initiation - This process determines which Accounts have activity and queues up the process initiation for each Account. This makes the reconciliation process more efficient and automated. Otherwise this would be a manual process or the process would run all banks and accounts at once. Parse data within Adenda - Moves data out of addenda to a separate field for more efficient matching (instead of searching on the addenda (which is large), we parse that data out before hand to enhance performance of the matching process. Sign-adjuster - Customization to determine the sign of the amounts on the bank statement. The bank statements do not have an identifier (+/-) for the amounts passed to us in the file. We created a customization to determine the sign based upon the BAI code. Upgrading Automated Bank Recon

LINK 10 November 16 – 18, Financial Gateway Payment Overview Back-end Bank System Financial Gateway Treasury Management Accounts Payables ACH Payments Payment Acknowledgement Wire/Transfers Payment Process Flow

LINK 10 November 16 – 18, Financial Gateway Overview Financial Gateway Treasury Management Dispatch Payments Page Bank Import Acknowledgment Files Page Accounts Payables Override Payment and File Status (Change Transaction Status) Cannot Alter Data Pages Used in FG for Payment Processing Payment Review with Drill Down capabilities does exist and is great!

LINK 10 November 16 – 18, Financial Gateway Overview Configuration Required for Electronic Payments Integration Broker (Part of PeopleTools) Communication AEP Sends to internal B2B (Webmethods encrypts and communicates with banks)

LINK 10 November 16 – 18, Accounts Payables (AP) –AP had Existing Feeds for ACH and Wire Payments with two external banks –Re-engineered to electronic payments via FG, with no functionality loss! –Main Functionality Points or Requirements: Separate AP payments from Treasury, ACH’s from Wires Bank Accounts required new configuration (payment methods) Non-standard payment information flow through Payment review process Implementing FG Electronic Payments

LINK 10 November 16 – 18, AP Customizations: –Automatically switch the payment layout code between ACH and WIRE –AP users were prevented from changing payment layout –Customized FG dispatch to populate different comments in addenda field for Tax payments Implementing FG Electronic Payments

LINK 10 November 16 – 18, Treasury (TR) –Electronic payments is new functionality for TR –TR responsible for managing bank accounts, short and long term financing payments, and the daily funding of business units –Segregation of duties is very critical Bank Account Configuration Settlement Instructions Initiating cash transactions Bank Account Reconciliation –Timing (near real time) of payments –Ease and thorough review and/or approve payments –Audit trail in order to trace payment back to source Implementing FG Electronic Payments

LINK 10 November 16 – 18, Treasury (TR) Customizations –Security Segregate Settlement Information from initiating payment –Require Templates (EFT’s) –Not removing any access to beneficiary account and routing numbers Locked the Require two approvers to “Select” and “Approve” Settlements configuration Allow update access to addenda information only –Payment Review – prior to release Review All settlement information within Financial Gateway Default Layout method based on payment type (avoid AP conflicts) Implementing FG Electronic Payments

LINK 10 November 16 – 18, Overall FG Implementation Challenges: –Extensive and complicated configuration –Coordinate communications with banks is a substantial effort Mapping layouts Encryption and/or decryption Other security (passwords and test vs. production) –Exception Processing for Treasury Cancel Payments, change a payment, payment must be in paid status FG Customizations: –Scrub Delimiters –Customized Maps for Payments and Acknowledgments –Backing out a Bank Statement Load Implementing FG Electronic Payments

LINK 10 November 16 – 18, FG “things we liked!”: –Sound module – not buggy –Intuitive for users…easy to navigate –Love the drill back to source transaction feature! –Drill back even allows you to go directly back to where you came from. –View of the payment and bank statement raw data is very useful –Integrated well with other Finance modules including accounting status Financial Gateway – Accolades

LINK 10 November 16 – 18, AEP’s Wish List: –Exception Processing for Treasury –Better Segregation of Duties – Security Approval Process for Settlement Instructions EFT Templates should not be editable –Scrub Delimiters –Payment Review should include a view of all settlement instruction, including addenda –Default payment layout based on payment type and disallow editing –Include HR (Payroll - Delivered) and Positive Pay Files –Map Fed Reference wire payment numbers from Acknowledgements back to source tables for reconciliation process –Backing out a Bank Statement Load Request for Improvements with FG

LINK 10 November 16 – 18, Questions? Rick Gray AEP Cash Management