1. Driving Efficiencies in Receivables
APRIL 2011
Presented by: Ron Victor, Executive Director
Senior Product Manager
S T R I C T L Y   P R I V A T E   A N D   C O N F I D E N T I A L

2. Source: Federal Reserve Bank of Boston (2008) / JPM TS
Payment Trends – U.S.
All Payments by Type
Check decrease
-3.8%
-6.4% e
-6.5%
Source: Federal Reserve Bank of Boston (2008) / JPM TS
B2B Payments by Type
ACH
IRD
Image exchange
Checks remain the primary method of payment for B2B payments.
B2B check payments are decreasing, but at a significantly slower rate.
Paper
Source: Celent, “Crossing Frontiers in Business-to-Business Electronic Payments”, January 2007

3. Trends in treasury operations: a paperless future
What is forcing companies to accelerate their transition to electronic processing?
Economic pressures
The uncertain economy has made companies tighten their belts, find new ways to lower operational costs and fund more projects internally rather than through the credit markets.
Scalability
Electronic solutions are helping companies respond to growing transaction volume, expand their global networks and accelerate the speed of business.
Risk management
Payments fraud and business continuity are emerging as even more critical business risks that require careful management.
Environmental footprint
Stakeholders are reexamining their own environmental performance, viewing paper reduction as one way to reduce their environmental footprint.

4. Key trends in receivables
The key to effective liquidity is accelerating the collection of receivables. Clients need a mix of receivables methods that are convenient for their customers and encourage increased sales while being cost effective. Clients look for and request:
Accelerated cash flow and improved working capital management — By improving the accuracy of predicted receipts, clients can release working capital. Web technology and e-commerce are emerging as drivers in streamlining and automating the receivables process.
Information integration — Clients can integrate with their ERP systems with better information and controls to automate cash application, reconciliation, and G/L process.
Cost reduction — Clients want to lower their bank fees and overall costs while realizing operating efficiencies and straight-through processing business models.
Risk management — Reduce financial exposure associated with timely processing of payments.
Enable easier Root Cause Analysis — Identify exceptions and track by reason code as quickly as possible—use the reason code tracking to identify root cause that results in the exception.
K E Y T R E N D S I N R E C E I V A B L E S 11

5. Receivables solution overview
Division 3
Division 2
ERP System I
ERP System II
Division 1
Information
Customers
Receivables Repository
Remote Capture
Information
Single FI
Checks
Corporate Treasury
P R O D U C T   S O L U T I O N S
Wires
Cards
ACH/EDI’s 43

6. Reengineering your receivables processes
You are challenged by:
Customers taking longer to pay, resulting in increased days sales outstanding (DSO)
Inefficient in-house payment processing that requires a significant capital investment in technology and infrastructure to support noncore business processes
High cost of transporting, retrieving and storing paper documents
The solution: Migrate to an electronic receivables process and electronify document processing and workflow for paper receivables.
Available tools
How you benefit
Online bill presentment and payment
Have customers pay invoices and manage payment and account information online
Remote desktop capture
Eliminate transportation costs and gain quicker access to funds
Electronic customer payments via ACH, wire transfer or financial EDI
Improve cash flow and solidify customer relationships
Image capture and retention
Automate processes, improve routing and storing of receivables information
Electronic receivables processes help you reduce costs, provide greater control over receivables processing, and enhance operational productivity and environmental performance.

7. Examining the high costs of paper processes
Large paper-based treasury operations can easily generate 5.5 tons of paper each year
Equivalent of 143 trees
106 tons of greenhouse gasses
Paper is expensive to handle. 500,000 pieces of paper costs companies on average
$250,000 in workflow management
$115,000 to research lost files
$150,000 in storage and disposal costs
Additional bank fees for duplicate paper copies of electronic documents
Paper exposes companies to significant business risks
Difficult to protect from unauthorized viewers
Increased risk of check fraud in a troubled economy
Lost documents resulting from natural disaster or terrorism impacts business processes and customers

8. How you could benefit from a “zero-return” treasury environment
Reduce transaction costs
Lower indirect business costs
Increase efficiency and save time
Improve transparency
Improve document security

9. Receivables case study: large insurance corporation
Challenge: Streamline paper-intensive receivables process
Reduce paper-related bank fees and avoid fee increases
Mitigate document security risks
Shore up business continuity plan
Solution: Developed new workflow process around online technology
Introduced new online receivables tool to all eight divisions
Ensured uninterrupted cash management in the event of business disruption
Defined users/administrative access to electronic files
Results: Savings and environmental responsibility
Reduced annual bank charges by more than $100,000
Eliminated more than 1.08 million documents
Saved an estimated 400 trees annually

10. Converting your customers to electronic payment options
Your customers may be more willing to pay electronically than you think
Educate them about the beneifts
Promote your electronic payment options
Challenge your banking parnters to help you
promote & increase adoption
Eco Flyer:
Co-branded environmental flyer
Customized with your annual invoice paper usage
Promotes your preferred electronic payment
methods
Call to action
Results:
One client had a 30% converstion to ACH

11. Receivables Benchmark Report
Proprietary tool that compares client processes to industry peers across 13 KPIs providing clients a better understanding of how efficient their receivables management approach is.

12. Benchmarking against your peers

13. Benchmarking against your peers
In the sample report, a single life insurance client is compared to 17 other J.P. Morgan clients in that same industry.  According to the report, the following observations and recommendations can be made:
Both the industry and this client have not leveraged the benefits of Consolidated Receivables reporting of ACH and Wire payments.  There are no clients in this segment who have adopted that best practice so this would be a good opportunity for a forward- thinking organization to distinguish itself.
This client forwards 100% of the paper sent to the lockbox compared to only 14% of the industry overall.  The Best In Class client in this industry receives no forwarded paper from lockbox.
Data capture and transmission is an opportunity for improvement.  Receiving a data transmission containing lockbox, ACH and wire data is an accounts receivable best practice that reduces DSO and increases straight through processing.
This client receives a large number of CAD checks in the U.S. and would likely benefit from the addition of a Canadian lockbox.

14. How do you compare against your peers?
Let us show you!

15. Questions?
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