Leveraging technology From invoice to payment Robin Steffey

Leveraging technology — From invoice to payment Robin Steffey Senior Vice President Payables Solutions Consultant Reid Andrews Senior Vice President Treasury Management Consultant July 17, 2017 © 2017 Wells Fargo Bank, N. A. All rights reserved. For public use.

Procure to Pay 1

Typical procurement process – inefficient and costly RPMG Research Corporation, 2014 Purchasing Card Benchmark Survey Results 2

The process starts WHERE Centralized | Decentralized HOW Electronic | Paper WHEN Timeliness WHO Multiple touchpoints RPMG Research Corporation, 2014 Purchasing Card Benchmark Survey Results 3

How does your organization stack up? Invoice processing time Invoice processing cost $23. 30 Early payment discount capture 65. 8% $9. 60 $4. 00 Best Average Bottom quartile In days 42. 7% From the Shadows to the Forefront: AP Automation and the Strategic Vision, Aberdeen 8. 9% 4

Automation is the key Full A/P automation Payments factory Invoicing network Mobile application for financial management activities Supply chain finance module /platform Leaders 61% 33% 46% 14% 28% 23% 40% 20% 11% Followers Percentage of respondents, n=60 Source: Aberdeen Group 5

Receiving invoices 2015 USPS Fact Sheet 2015 Visa Benchmark Study 6

Fully automated workflow 7

Invoices get into the AP system Gorilla Expense – April 2015 8

Payment Optimizer Sample Output – Overall Vendor Snapshot Model Inputs Unlocked working capital based on current DPO Potential unlocked working capital based on targeted DPO E-Payment Strategy 9 9

Payment Optimizer Sample Output – Vendor Specific Snapshot 10 10

Payment Automation

Supplier payments Commercial cards ACH Wires Checks Remittance Supplier characteristics Terms Relationship Technology 12

Analyzing how you pay Average cost per transaction cost by payment type Payment method Paper Electronic Cost per transaction Paper checks $7. 15 Wire transfer $10. 33 ACH $4. 78 Commercial cards $3. 91 Potential savings with Card: $3. 24 per transaction Scott Pezza, William Jan, and Ankita Tyagi, "The E-Payables Solution Selection Report: A Buyer's Guide to Accounts Payable Optimization, " Aberdeen Group (October 2013). 13

Cost to the supplier Cost to buyer? * Cost to supplier† Value? Value factors Check $7. 15 $33 ? ? ACH / DD $4. 78 $32 ? ? Wire / Electronic $10. 33 $43 ? ? Commercial card $3. 91 $22 Vendor Reporting Spend Management Process Automation Compliance ? Expense Control Audit Cash Back / Rebate? *Scott Pezza, William Jan, and Ankita Tyagi, "The E-Payables Solution Selection Report: A Buyer's Guide to Accounts Payable Optimization, " Aberdeen Group (October 2013). 14 †Fully loaded cost per $500 transaction

Having a game plan — supplier analysis Collect vendor data Analyze data Define and deploy strategy Achieve results + Working capital impact + Payment discounts + Card revenue share + Supply chain finance + Reduced payment issuance costs 15

Once you determine method of payment, automate your payment process One file Your payables system Your bank Payee Major banks like Wells Fargo offer payment platforms, such as Wells Fargo’s Payment Manager® that can support multiple payment types in a single file. 16

The payments landscape is changing fast – and much of this fast-paced change is being driven by today’s digitally empowered consumers, whose expectations have been transformed by the smartphone and the services these supply. * ITPro. Portal, “Trends in electronic payments: What to expect in 2016, ” December 2015

Mobile payments are catching on Person to person (P 2 P) mobile payments: consumers sending payments to other consumers online or via mobile app 1. 4 Billion smart phones sold in 2015 U. S. P 2 P mobile payments (Billion $) $92. 1 P 2 P payments monthly $59. 4 58% 28% of consumers favor the convenience of mobile commerce 25% U. S. adult smartphone users initiate of Americans 2016 Sources: Gartner, e. Marketer. com, Mobile Commerce Press, Mintel 2017 E view mobile payments as payment method of the future 18

Payment Manager® with B 2 P payments § Pay consumers electronically with email addresses or mobile phone numbers in lieu of bank account info * § Leverages the clear. Xchange database (an Early Warning Services company+), to be rebranded as Zelle in mid 2017 *USD payments to consumers with US bank accounts +Early Warning Services is a real-time securing messaging platform and directory 19

What powers B 2 P payments? Digital payments network Created by banks and managed by Early Warning Services One-time registration Consumers associate their email address/mobile phone number with a bank participating in the network or at clear. Xchange. com, thereby setting up their “token” Cross-reference of bank-to-token information At payment initiation, Wells Fargo receives email address or mobile phone number (payee’s token) and makes call to the network to receive depository bank information. Then money is moved from bank to complete payment. 20

B 2 P payment solutions B 2 P to both Registered & Unregistered Payees • At time of payment initiation, registered payees receive funds into depository account within 2 business days, without requiring further action from payee • If payee is not registered at time of payment initiation, Wells Fargo will email* payee a one-time registration invitation, including instructions for enrollment to receive the electronic payment • Payee has 14 calendar days to register • Solution reduces need to ensure payees are registered prior to payment initiation • Promotes payee acceptance of B 2 P payment type as no upfront effort is required B 2 P to Registered Payees • Send payments only to payees who have already registered their email address or mobile phone number • Payments initiated to an unregistered email or mobile phone number will reject, to be reinitiated using an alternate payment method • Solution reduces potential for returned payments as no additional steps are required from payees for payments to settle into depository accounts B 2 P to Registered Payees, with WF Check Completion Option • Send payments to payees who have already registered their email address or mobile phone number. • If the B 2 P payment cannot initiate successfully to a registered email address or mobile phone number, or the solution determines the email address or mobile phone number is not registered, Wells Fargo will automatically issue a check payment, which will streamline your back-office operations. • You include complete check instructions along with the B 2 P payment request • Solution reduces need for you to ensure payees are registered prior to payment initiation *For Unregistered Payee, enrollment instructions can only be sent with a payment initiated using an email address 21

Continue to evaluate your processes “Electronify” Payments Streamline Ordering Process Automate Receipt of Invoices Rationalize Suppliers Analyze Payment Methods 22

Thank you 23