© 2012 Financial Operations Networks LLC Pay Card Practices: A Powerful Alternative for AP Operations

About Your Presenter James Lallande, APM Senior Accounts Payable Manager, DynCorp International James joined DynCorp International in 2008, where he serves as the Senior Manager of Accounts Payable and oversees Document Management operations. Through leadership and vision, James has been instrumental in the company's expansion of electronic expense reports and the implementation of electronic invoice processing. Prior to joining DynCorp International, he managed Accounts Payable departments in the home building industry and location management for Budget Car Rental. James holds a Bachelor of Business Administration in Operations Management from Radford University.

Outline Introduction Issues with manual checks Benefits of electronic payment Pay Card vs P-Card Selection Process Implementation PNC Pay Card Challenges Estimated and realized benefits

DynCorp International

“We Serve today for a safe tomorrow” We serve to make the world a safer place —Take on the toughest challenges in the most challenging locations across the globe to make the world a safer place We serve those that defend freedom —Serving all branches of the U.S. armed forces, keeping them mission-ready at all times We serve those who restore peace and stability —Serving to support progress in post-conflict nations to restore peace, rebuild physical and civil infrastructure We serve those who make the world a better place —Serving to fight the war on drugs We serve those who respond to natural disasters —Serving to fight forest fires in California DynCorp International (Cont’d.)

Our Work: Worldwide Support Solutions Aviation Air OperationsOperations & Maintenance Training, Mentoring and Security Intelligence Training & Solutions Development Contingency Ops

Manual Checks Labor intensive Remedial task Cost of postage Stuck envelopes Mail delays Bank clearing hold Escheatment

Methods of Payments Checks Cashier or Certified Checks Wire Transfer Automated Clearing House (ACH) –aka Direct Deposit Procurement Card Pay Card

P-Card vs. Pay Card Procurement Card –Point of Sale Transaction –Receipts –Cardholder reconciliation –MCC Mapping Pay Card –Payment Method Transaction –Accounts Payable initiates payment after invoice processing to vendor –Method of transfer Push Pull

P-Card vs. Pay Card (Cont’d.) Visa or MasterCard Merchant requirements –Bank fees

Benefits of Pay Card Rebate Additional cash float –Invoice Terms –Billing Cycle –Statement Terms Retain stop pay prior to presentment Banks will do most of the work No escheatment once charged No paper checks or payment advices

Preliminary Steps Complete a Spend Match –Data export of all suppliers paid along with annual spend –Match base on suppliers current involvement in credit card payments –Estimate potential spend –Estimate program benefits Rebate Cash value of additional float Analyze results to narrow potential exclusions Define Roles & Responsibilities Brief Purchasing in order to leverage terms

Preliminary Steps (Cont’d.) Decision to proceed with project Selecting a provider –Treasury and Accounts Payable Integration –Rebate percentage –Payment terms –Ease of transmittal Complete contract –Legal Approval

Configuration Identify Roles and Responsibilities –Program Administrator (Treasury) Full Rights –Vendor Administrator Establish vendors including entry of account numbers –Payment Initiator Uploads Accounts Payable File for processing –Researcher Read Only rights Reviews open invoices processed for payment but not charged –Reconciliation (Cash Reconciliation) Completes request for payment to merchant for invoices charged

Configuration (Cont’d.) Create file export or data transfer from ERP to Merchant Additional ERP configuration as required

Build Templates Banks often have existing templates Key Documents –Internal program announcement –External vendor announcement –Enrollment form Create payment advice notification that includes data currently on check advices

Supplier Remittance

Project Enrollment Contact suppliers for enrollment –Often completed by the provider Supplier Prioritization –Phase 1 Suppliers currently participating in Pay Card programs –Phase 2 Suppliers that accept credit cards –Phase 3 Suppliers that do not have credit card merchant accounts –Phase 4 New Suppliers

Solicitation Documents

Solicitation Documents

Solicitation Documents

Card Establishment Collect enrollment forms Final company verification Bank issues cards or card numbers Distribute or communicate card information

Card Establishment Communication

Implementation Steps Program Administrator —Configure users and roles Vendor Administrator —Establish vendor record and assign card number in online payment processing tool Distribute credit card information to enrolled suppliers —Each supplier receives unique credit cards —DynCorp International chose not to press or distribute cards

Implementation Steps (Cont’d.) Contact the supplier prior to first payment Initiate initial payment of a single invoice Proceed with future payments

Communication Follow up of initial payment Incorrect data from suppliers Suppliers that do not understand the full program Merchant fees Pricing discounts Suppliers charging amounts that differ from total payment amount (Check Total) Communication of start date Not utilizing the full support of the bank Challenges

DynCorp International Estimates Phase 1 $25 million anticipated year 1 spend $100,000 year 1 cash value of additional float Estimated total program after Phase 2 and 3 $75 million spend $352,000 cash value of additional float

Questions

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