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A is for Accounts Payable Fundamentals – ABCs of Virtual Card, Session 1

Just tell you a little bit about me. I am the principal of a company I formed in 2016 called Knox Advisors. Essentially, my business is responsible for helping banks and banking organizations with business-to-business delivery of products, relationship building, product process review, and so on. Treasury management education is very important to me. I have worked not only with the Pennsylvania Bankers Association both virtually and in person. But also with the Virginia Bankers Association and obviously now ACBB. What I’m going to hope to do over today and the next several weeks is to really incorporate the experience I have in treasury management and also my knowledge, obviously of being in the banking world for a long time to guide you through these ABCs of virtual cards. So that’s a little about me.

And let’s talk about Session 1. This is going to provide a background and a foundation for the three weeks. It is a bit of a history lesson. It will be a little more weighted towards businesses than banks. But after all Community Banks are businesses. Again to just establish that we are all on the same page with regards to what we face in doing our accounts payable. We’re going to talk about automation and the electronification of payables, talk a little bit about ACH. Although this is a card-based three session. We do have to talk about ACH as well and we will talk a little bit about both the pros and cons of using cards. As you can see from the other two sessions, they will expand upon this session two is going to spend some time talking about the distinction between payables cards or P-Cards, purchasing cards, and virtual cards and also highlight the benefits and some of the challenges around establishing V-Card program. And finally, the third session hopefully, will tie it all together, enlighten and motivate you to migrate towards V-Cards. We’ll talk about why now, what’s driving the integration and we’ll end actually with a case study of how ACBB established their own V-Card program. So, again, hopefully you will join us for all three. I made a little joke this morning to Kim about an analogy of trilogies. I’m a big Star Wars fan. And if anybody else is on the line, you know, that you had to do all three, because the third one was really the best. So hopefully that’s where you’ll find this as well. So, again, join in, ask your questions. We’re going to discuss how and why you need to be aware of accounts payable trends. Look at the basics of AP, paper, plastic, and transitioning of payments. So that’s what we set out to do today.

Okay. So how do we get here? Again, little bit of history. The check, which I guess could be considered a dinosaur, probably would have been extinct many, many years ago if remittance details that support the payment would have been more accessible. I don’t know that any accounts payable supervisor or controller, or Chief Financial Officer necessarily loves their checks, but what they do love is the repetitive of how those payments can be applied to their accounts payable and, quite honestly, to their accounts receivable. So, fintechs coming into play, certainly has accelerated the movement away from check to electronic payments and ultimately to card payments. AI is certainly aiding in that whole transition, the ability to take the remittance details with that payment, attach it and, you know, be able to update payables automatically is really what it’s all about. The cost savings between receiving a paper check and receiving an ACH, if you’re on the AR side, is quite significant, as you can see there. It’s just too compelling to ignore. There are actually some sources that will say that a paper check generation costs even more than what we’re saying at $4.57 and could be as high as $20 depending upon the organization. And what you’re talking about, there is the whole flow from the approval of the payment, to the generation of it. And again, all of the tracking all the way to reconcilement. So, all of that process is quite unwieldy.

We can’t talk about payments changing without, unfortunately, talking about our national disaster, back on 9/11/2001. That particular day, all checks that would normally have been presented in person, because there was no remote capture at that point, stopped because there were no more planes flying, no more trains moving, cars hardly moving. Essentially, check clearing came to a screeching halt that day. Fortunately, people were focused on obviously many more important things and didn’t realize that it caused such a turmoil in the check clearing system, but there were certainly people in all of the commercial banks around the country as well as the Fed who said, oh my Lord, we need to come up with a different way to clear checks and that prompted Check 21, or the Check Clearing for the 21st Century Act. It did take till 2004 for that electronic check clearing system to actually come to fruition. So, about three years later. We did move to that way. And of course, now, that’s how not only do we clear checks from bank to bank, but also from businesses to the bank and from consumers to the bank. That’s the way in which checks now move and images are certainly the way to go. Twenty years later, give or take, after Check 21, we obviously had a bit of a test as well with the COVID shutdown, but of course, that was really bringing the in-person sort of banking to a standstill as opposed to the behind the scenes that we saw back on 9/11. But the genie is obviously out of the bottle, you know, our preferences now, are to have contactless payment and to be able to present items electronically, so the movement is there.

What does this all mean? Where are we going? Obviously, we’re going to be going towards non-paper- based payment solutions. It’s a rapidly changing competitive landscape. Our players are more informative and proactive than perhaps they once were. There are unfortunately more creative non-bank providers as well. So for us as banks, whether we’re talking about how we sell to our clients or how we ourselves do our own payables, we obviously do have some challenges there. Why do we need to know it all? Again, you can’t help your business clients if you don’t know the trends. You can’t generate that important treasury management revenue if you’re on the sidelines. You certainly can’t do it alone. I think we’re finding more and more interesting alliances between banks and non-banks, fintechs and banks, people who were at one time competitors, or maybe still are competitors, are joining forces. And certainly going to your organizations and your trusted advisors like ACBB is really what you need to do. Again, bearing in mind, that we banks are businesses too. We need to manage our own AP just as our clients do, so the need to know is all-encompassing.

So let’s talk about the real basics. Everybody has to make payments. Like it or not, we all have to do it. They fall into categories. There could be some that I’ve missed here, but predominantly these are the ways in which a business or a bank needs to make outbound payments. First and foremost is payroll. That’s usually going to be either check or direct deposit. Although there would be a possibility, and there are some companies out there that will use a reloadable debit card as a way in which to pay their employees. Payroll is usually on a different issuance system than accounts payable. It probably also has different people responsible for the issuance of those payments and the reconcilement. It doesn’t have to be but it often is. So, you know, payroll sort of stands off by itself and may not necessarily be a place that you would look to make changes that include cards. As I said, other than possibly a pre-loaded debit card that the individual could use to make all their purchases.

Accounts payable is the place where we see the most activity, if you will. It’s the largest portion of payments for virtually all sizes of business. This is your vendors, your suppliers, your trading partners, all of your business expense. And the ways in which we pay run the gamut: checks, ACH, business cards, purchasing cards, vendor credit, bank credit, and of course, virtual cards. So, lots of different ways to pay. It’s costly and cumbersome many times because there are a lot of manual processes.

The advent of what we went through with COVID has changed some of those processes, where perhaps the person would have walked down the hallway to their supervisor, or to another person to have an invoice approved. That may very well be done now electronically. Again, because of necessity and to improve the workflow. So it may be a crazy side benefit of having been forced into that position. Again, accounts payable is the place where, if you are going to move to virtual cards, this would likely be the place or the type of payment that you would be looking towards.

Tax payments again for the good, the bad, and the ugly, we pay taxes to multiple entities, a variety of different state, local and federal agencies. And many of those payments have actually moved to ACH but it isn’t always very smooth. Sometimes, we can’t apply correctly to AP because they’re two different people or two different processes again. Originating the payment versus updating payables.

In some cases, it’s just difficult to get that data to flow. I have not seen a lot of activity with card-based payments for taxes. And again, typically that would be because the receiving agencies do not wish to have a merchant relationship and receive cards. They are much more inclined to want the ACH payment. The last category of payments is employee expenses, T and E, travel and entertainment. Again, here’s a place where we see business cards, purchasing cards… that has done a lot to streamline those types of payments. And again, we’ll talk a bit more about cards in our second session, as far as purchasing cards are concerned, but this is again an area where probably not a virtual card spot. We’re going to probably focus back on that accounts payable.

I’m going to take a breath here. Do we have any questions coming in, Kim?

We don’t have any. If anybody, again, if you have any questions, please place those in the chat box, everybody’s muted. So I won’t be able to ask those live, but please just place those in the chat box and we will get those answered for you.

Okay, sounds good. And again, I know this is basic but that is exactly what we want to make sure of, that everybody again is on the same page.

So, again, more basics.

ACBB was kind enough to do this lovely graphic for me. Talking about kind of what happens today. An invoice is generated for goods or services. Someone again, is improving that, inputting it into their system, okaying the payment and it’s typically going to be either a check or an ACH or electronic payment to those vendors, that’s kind of the today. The basics for hopefully today and tomorrow is to incorporate not only what we’ve already seen with checking ACH, but to include that virtual card. And you can see the selection of the card type being made there rather than a check, an ACH or a wire. And essentially, the virtual payment is a 16-digit single-use credit card that’s already embedded into the AP system. This is what distinguishes a virtual card from a purchasing card or business card where it isn’t embedded necessarily in AP, it isn’t a single-use type of transaction. There is some other manual intervention that needs to occur. So, by virtue of being able to embed this in AP, you make it look and act more like its cousins, the check or the ACH transaction. That’s kind of the beauty of virtual card. And obviously, we’re going to spend a lot more time on that. Not only next week, but of course the third week.

So again, back to some more basics, the challenges of AP. It is really all about the data. Tying the payments to the invoices, updating the AP records, managing that historical information, and ensuring the accuracy of the payment. Bear in mind, big picture: If you are the controller, the CFO, the VP of Finance, you are as concerned about the reporting and the record-keeping, as you are about physically having the payment made on time. So again, tying all of that back and being integrated, you know, with other systems within financial reporting, and so on, that integration is a really big piece.

Security and fraud, you know, unless we’re all living under a rock, we know that fraud is really awful. And trying to stay ahead of the bad people and trying to prevent fraud from happening to you is a daily worry for those running companies and running banks’ financial systems. So again anything we can do to mitigate that fraud is a good thing. We know that if we’re issuing checks, we can use positive pay as a way to mitigate fraud. We know that, kind of that, he cow’s out of the barn, a little bit, on positive pay. That when the fraud occurs, you are catching it after it occurred, but you’re able to mitigate your losses. Even with ACH doing various debit blocks and so on, allows you to recoup, recover, mitigate after the fact. One of the things about a virtual card that makes it unique is because it is a single-use number and is integrated into AP, you are really mitigating the fraud upfront. So that’s kind of a key, you know, tuck that one back there, put a little star next to it. Hopefully you’re taking a note or two – that’s really a key component.

Last but not least, cost control for AP. You want to keep the cost to issue the payment to the lowest level you possibly can. It’s sort of the idea that it’s bad enough, I need to make the payment. I don’t wish to pay more for it than is absolutely necessary. So, you know, however I manage my AP, my constant goal is to control costs. Okay, to keep that cost down to keep the workflow as seamless as possible. That’s really what I want to do. And I mentioned the integration before. Again, that’s a big key, being able to integrate with all of the other things that the business needs to do to report. We as bankers have a myriad of recording that we need to do on all kinds of different levels. So if anybody understands financial reporting, it would be bankers. And again, knowing that those things are integrated and not have to repeat processes is really a big thing.

Give you some statistics. This is from a company called Strategic Treasurer. On an annual basis they do a survey with TD Bank. There’s 100 questions, posed to 250 respondents. Those respondents are both corporate clients and banks and their survey that came out in December basically had these statistics. They said 48% of those participants indicated that COVID helped increase the adoption of electronic payments. Almost a no-brainer; in some cases there just was no choice. It was the only way to get payments done. Again, with people not in their offices, with them working distributed or dispersed and everything being kind of upside down, this was one way to make payments was electronically. 43% of AP and 48% of AR, or accounts receivable, reported a permanent shift in their payment choices. So nearly half reported a shift in what they were doing. And again bear in mind this isn’t only corporates, this was banks as well.  56%, so more than half, reported a permanent shift in their location of work, many of the companies and banks closing down office buildings or minimizing how many people need to be physically in the workplace allowing the work from home to continue past COVID. So again, that shifts the process of how payments are authorized and actually made. Again, 42% of the AP folks increased their security and control. So again, they’re concerned about fraud. If you look at this again, big picture, they’re saying okay, we know we need to make this shift in how we pay, but we don’t want to lose the ability to control fraud. So V-Cards, again, with that embedded feature and being proactive on the front, would certainly come into the play there. And last one, 31% of the folks on the AR side indicated a willingness to accept additional payment types. So those who had been predominantly check receiving were willing to receive ACH, were willing to receive purchasing cards. That is a really big key in the look at V-Card program, because now you’re saying that 31% of these folks said they would be willing to accept a purchasing card. So if they’re willing to become a merchant and shift their process and assume the cost of being a merchant, then they are a viable candidate to receive a virtual card payment. Because they’ve already made one of the biggest hurdles, which is that willingness to be a merchant. And again, this was about a third of those surveyed. So again, some great statistics hopefully to support the transition of payments.

There was also a survey last year, end of the year by AFP, which is the Association for Financial Professionals. It’s the credentialing group for certified treasury professionals. They do this risk survey on an annual basis, and they asked the treasury teams that they surveyed to give the top three areas of focus for them for the coming year. 79% said that their focus was going to be on managing cash flow, working capital, and liquidity. That’s not a great surprise. That probably should always be the primary focus of a treasury team of any size company or any size bank. We’re always worried about liquidity. We’re always worried about cash flow. The reason it’s important in context for accounts payable, is that cash flow involves both accounts receivable and accounts payable. So it is something we obviously need to be aware of. 52% said that one of their top areas of focus would be to be more proactive to and/or they would be adopting new technology. Again, that’s great. So more than half of the folks surveyed were receptive to the idea of change, you know, not just treading water and doing things the same old way, but they were willing, or they had already planned to adopt something new with regards to technology. And last, 48%, so almost half, wanted to improve the effectiveness of their team with other internal stakeholders, being IT, risk, the business lines, and so on. Again, it is important for us to think about that one as well because it’s saying, hey, I know I’m not an island, treasury can’t stand alone. We have to be concerned about risk. We have to be concerned about the sales process and that again comes into play in looking at a virtual card, because as you are selling to someone and receiving funds, or as you are being sold to and needing to pay out, there’s a negotiation of contracts involved. So that idea of having an effective team with others that you work with and for really comes into play.

Again, I’m going to take a breath here, lots of information. Anybody have any questions? Thoughts comments, observations.

I don’t see any coming in yet Deb. I hope they’re all still awake out there.

I’m sure they are. It’s a lot of great information. Thank you.

Okay. All right. So, I like quotes. So as Kim knows I threw a bunch of silly things in here. Keeps me entertained. Hopefully you as well. I like this Henry Ford quote. He said, “If I had asked people what they really wanted, they would have said faster horses” and not a car. Hopefully that’s not the case with us as bankers, you know, faster horses isn’t what we need. We need different payment alternatives. So again, being aware of these technology trends, solutions, and aligning your company, your bank with partners who share those visions is a good thing. I put in here, even, you know, partnering with current competitors, who knew, that is certainly another option. I’ve seen consortiums of banks with fintechs clearly partnering with, you know, a trusted advisor like ACBB, is something that makes sense. Again, this idea of not doing things on your own.

Little bit more statistics or verification. Something called the Strategic Treasurer B2B Payments Report. Again, comes out on an annual basis. This was in December of 2021, and it was again, looking at what corporates plan to do over the next 12 months. They were planning to increase their ACH payments by 61%. That’s huge, a huge amount and many of them, 23% of them, said that they would actually be moving to same-day ACH. So again leaving that dinosaur, the check, and moving towards electronic payments.

Other great news is that 28% were going to be increasing to virtual card payments, 27% to real-time payments. So again, you’re seeing the trend. The trend is being supported by the facts, if you will, that people are going to move away from that check. You know, when will it be a totally checkless society? Can’t predict that one. But clearly we’re seeing a migration away from it. Again, 64% said that they are making more than 51% of all their B2B payments electronically.

So, way more than half of the group survey saying that at least half of their payments B2B, were being done electronically, a pretty large statistic. Little bit more on this, 74% of those surveyed, the corporates were asking for B2C payment solutions. So again, business-to-consumer, and many of the banks were looking at what you see here. RTP, Zelle PayPal, Mastercard Send, Venmo looking at all those different options as a way for businesses to pay consumers. And again, get away from checks. Footnote here is that ACBB is a funding agent in the RTP network, if you hadn’t already been aware of that. Hopefully, that gives you a heads up on this as well. But again, for those businesses that need to pay consumers again, trying to get away from the paper and move to different avenues that are more palatable to the consumer. You know, ACH is obviously an option, but typically they won’t be repetitive payments. So if they are then ACH may or may not be the best avenue, you know, one of the other solutions here might be a better avenue.

Again, we can’t forget ACH because it is growing by leaps and bounds and certainly is helping to change the way we look at checks. This statistic is from the end of last year. ACH volume increased 6.1% quarter to quarter, third to fourth quarter, the value obviously, grew a great deal. The one we need to focus on is the B2B. Transactions increased 17.4% to one and a half billion transactions. That’s a lot of transactions. The ACH transaction volume gained share over check and card for the first time in 2020.

Again, that’s something that I don’t think we realized what happened as quickly as it did, and it did happen. And it’s continuing to grow. We’re expecting the trend to continue. So the idea being that if I want to get rid of the check, I’ve got ACH as a possibility. I’ve got card payments as a possibility. I got all of these different digital and electronic opportunities to move away from that paper check. The Fed announced, Federal Reserve Bank announced, a pilot program in January of 2021. There were 110 participants at the onset of FedNow. It is expected to launch in 2023. I did try to find a date because that seems to be changing, but I think they are hoping for first quarter of 2023. Again, a note here is that ACBB is a member of the FedNow pilot group. So they’re on the forefront of this. The goal here again is to provide around-the-clock payments using the FedLine rails.

If we think about it, this is probably almost a little late. They probably should have been even a little further ahead of the curve on this because they saw the transition happening with same-day ACH, that wire volume was basically dropping like a rock, those who, prior to this past year, when they raised the limit to a million dollars, couldn’t use same-day ACH, they had to use a wire. Now virtually any kind of payment can be made by same-day ACH. So FedNow is looking at the solution that will hopefully help us as community banks, will help us to be able to make payments using those same rails as a wire without having to reinvent the wheel, if you will. So obviously, there will be more on this. And I’m sure that if you reach out to Kim and to ACBB, they can help you out if you weren’t already aware of FedNow.

Yes, we’d be happy to provide more information. So, thanks, Deb.

Absolutely. Again, just kind of a summary here. And because I do enjoy, you know, silly history types of things. Talking about the transition, just to cite an example of Blockbuster to Netflix. Those of you who are old enough know that in October of 1985 Blockbuster launched. And again, for those who aren’t familiar, this is when we watched movies on tapes. Okay? On VHS tapes. Oh my Lord. Anyway, we would go to the Blockbuster store, select our movies, rent them, if you will,  take them for a specific amount of time overnight, or for several days or whatever. We paid a fee. We brought them back. You got more movies and you know, life was good. So Blockbuster was doing great. At their peak, which was in 2004, they had 9,094 stores in 12 countries. They had 84,000 employees, you know, again, life was good. Here’s the problem. By 2010, they were completely bankrupt and out of business. Now, why? It should be obvious, right? Netflix.

The leadership of Blockbuster basically had their head in the sand. They did not think that things like Netflix, Redbox, streaming services and so on, were ever going to come about. So they just did things the way they always did. You know, we don’t want to be that. We banks don’t want to be that. We don’t want our customers to be that. We want to learn from that and know that things do change. We do need to transition. And that’s what we’re seeing, hopefully, in the transition of payments. So again, as we’ve said, both AP and AR, they do love their paper, but they are wavering. They are looking towards these different types of payment mechanisms. We do know that ACH is far more than direct deposit, and we’re glad about that again, that movement away. We know that plastic could be for all at least in some way, shape, or form, whether we’re talking about a traditional business card, a purchasing card, which is basically a business card on a bit of steroids or a virtual card, which takes all the convenience and the good things about plastic and marries it to AP.

I like this phrase: trickle-down is now a flood up. In my days in banking, products were always devised, if you will, developed and thought about at the largest banks and eventually trickle down to me in a community bank. It was the big guys. They came up with all the great ideas of all the electronics and online banking, and payment origination and so forth. That was the way it always was. So the big guys and the large corporate customers seem to get everything first and then the regionals and the middle market. And then it came to the small business and the community banks. I think that has reversed itself and I now call it a flood up instead, because what now drives some of our product invention is our consumers.

I know this is a discussion about business. And I know this is a discussion about banks, but you can’t do that without discussing what the consumer wants. They drive things. Their desire during COVID, and now beyond, to have contactless payments, their desire to have things quickly and ready to go, their desire to make their payments in different ways than what we ever did before is changing how we react. You can’t just say, well, it’s a phase, it’s going to go away. It’s not going to go away. So again that flood up is how the consumer wishes to pay the business, how the business is then going to turn around and absorb that, and how that business is then going to pay their providers. So it really is kind of a flood coming at us that we need to react to so that we don’t become Blockbuster.

Again, anyone with a comment there, anyone seeing that flood up at their organization?

Okay. All right, beat goes on again. Card-based receivables, payables products going to continue to evolve, decrease those paper based products that we’ve all known and loved. Again, everything’s changing. If you are a treasury management bank, providing product to your business customer, you obviously need to be flexible. You need to be able to react and you know, or you’re going to be risk being replaced by somebody else. As banks, same thing. We need to make sure that the way in which we’re paying mirrors what our best customers are doing. You know, how are we going to teach them, how are we going to sell to them if we aren’t willing to make some of those changes ourselves?

Boy, I must have really talked fast because I’m already at my did we make our goals for the day? Again, I would hope that, we probably belabored the basics, maybe more than you wish to, and talked about the transitioning, teeing us up for next week, where we’re going to look at again, those differences between purchasing cards and virtual cards, but this is your time. So please, questions, comments, expectations of what you would like to see over the next two weeks. So we make sure that we’re doing things the way you would like it to be.

Yeah, absolutely. Anybody, anybody have anything? Okay, here we go. What do you see in the future of lockbox solutions? Are there any next gen there?

I guess the gen now on lockbox, and thanks for asking the question, is that we do have providers out there again, both banks and non-banks who are amalgamating payments. So as an example, a person can send a check to the lockbox, which is its traditional function. They can send an ACH payment. They can send a credit card payment depending upon, again, the type of business. We see this a lot on the retail lockbox side, where people are making, let’s say utility or insurance payment so they can send a check, they can do a direct debit. They can do a credit card payment, the lockbox processor amalgamates those three into one data stream that then feeds that particular business, you know, that utility company, that insurance provider, or whomever. So those products are out there. Those Solutions are out there. Again, with checks waning and probably even more so on the consumer side than on the business side, I would envision that lockbox as we once knew it, you know, there really isn’t as much of a need as there once was for that.

Yeah, I’d agree with you, Deb, and just as the product analyst here at ACBB, one of my responsibilities is looking at new products and solutions for our community banks. So we are actually in the process now of researching electronic bill pay, and presentment options for community banks, for your commercial and business customers, so, we may have some new offerings for you guys here in the future in regards to lockbox.

Awesome.

Just a little plug there.

It’s a good plug. Others? It doesn’t matter, questions about AP, anything else, you know, treasury management related around products, you’d be welcome as well. Again, this session is much more geared towards that than the next two will be.

I do you think this was a great foundation, Deb. A lot of really great information and statistics. So thank you for putting it all together.

Absolutely. Couple more slides, just a little bit of stuff here to keep you informed. These are obviously some resources. Certainly ACBB, you already know you have a resource there, but Association for Financial Professionals, AFPonline.org will give you some information. You can only get some of it by being a member. But there is some basic information out there available for you. Strategic Treasurer, which I quoted a couple of times, there’s a wealth of information on their site about what’s new and what’s trending. Nacha obviously is a good site to look at the statistics, to look at what’s changing to see what Nacha’s got on their horizon. Because again, they have changed a lot about what they do and it isn’t necessarily all ACH anymore. So again, that’s a place for you to gain more information. And last but not least is a company called Barlow Research. Again, some of their information is at no fee. Some you need to be a member for but they provide a lot of good treasury-related, payments-related type of information. So just a couple of them for you to use. I told you I love quotes. This is one that I used a lot with my sales people over the years, much to their dismay, I would guess. “Poor planning on your part does not necessitate an emergency on my part.” That’s because I’m kind of, you know, ridiculous about planning and lists and whatnot. But that’s how we hopefully stay successful.

And last but not least is perseverance. “Perseverance is the hard work you do after you get tired of doing the hard work you already did.” I think a lot of us feel like that’s what our day looks like. That’s what are week, our month, our year, you know, always being persistent and persevering.

So, I can agree with that Deb, not to interrupt, but perseverance, and persistence are definitely key to a successful virtual card program. So you picked a good word there.

Well again, I do hope that you will join us in the next two sessions. If you have any recommendations or suggestions that you would like to pose as to other parts of this topic that you would like to hear, other treasury topics that you would like to hear somewhere down the road. Maybe not even related to virtual cards, but something else that we might be able to put together. Obviously, we’d love to do that as well. Any questions comments. I got you out early. My goodness.

You’re fine. You’re fine. Well, yeah, if anybody has questions, feel free to throw those in there. If you can’t think of something right now, and something pops up later, please reach out to us. You have our contact information and yeah, thank you so much Deb. And thank you everyone for joining us this morning. We really appreciate you coming in and for your participation.

Anything else comes up, please, feel free to reach out.

Otherwise, we’ll see you next week at 9:00.

Absolutely, looking forward to it. Thank you. Have a great day, everyone.

Hey Kim.

Hey looks like okay. So how many? Was great? Could you? Um, there was about four and a half. So [Yurga?] I’m not sure if she was having trouble or what, but she came in and then left again, so I don’t know. Nikki said we had 20, I don’t know if it was the same organizations and maybe people just grouped together. But yeah, you know, it was a great session. I actually learned some things. So thank you.

Well, I’m doing it for four people.

But no I’m sure there were probably more, I can ask Nikki how many different organizations we had and yeah, but you know next week we’ll probably have even more so.

Well, like I said to Bill, well to the group, I guess I was a little worried about doing three. I thought we should do two but maybe.

B is for Basics & Benefits, ABCs of Virtual Card Session 2

As Nikki said, we are going to record this. So we hope that everybody does participate. Really quick about myself. My name is Deb Knox. I have a company that I formed in March of 2016 called Knox Advisors. There’s an extra credit for anybody who can determine the year in which I started as a part-time teller while I was in school. The song of the time was American Pie by Don McLean. So if you know the answer to that, you can interrupt anytime. Anyway, Knox Advisors was focusing on helping banks with B2B product delivery, relationship building with businesses, product and process review, and workflow, and treasury management education. I’ve been an instructor both virtually and in person for the Pennsylvania Bankers Association as well as the Virginia Bankers Association. So hopefully, again my experience and expertise with business treasury management and also my knowledge of banking and the infrastructure is going to be valuable in helping to guide you through these ABCs.

Last week’s session 1 was the background and foundation of our ABCs, and just so that everybody is on the same page, I’m going to spend a little bit of time talking about some of the things from session 1. We said we needed to know about payments not only for ourselves as banks but also to be able to offer expertise to our clients. We talked about the different types of payables, payroll taxes, employee expenses and accounts payable or AP. AP being the one that we will focus on with regards to v-cards, the other types of payments, obviously, could have some applicability with virtual cards, but AP is the number one. As far as what was important to clients as well as to our own banks, was the data flow that accompanies a payment, security and fraud mitigation, cost control, and integration with other systems.

We also talked a bit about the growth in ACH as an alternative payment, in fact that payment growth in the B2B space increased about 17%, from 2020 to 2021.  And last, a little bit of a statistic, if you will, from the 2021, Strategic Treasurer business-to-business payments report. They talked about the fact that there would be a 28% increase in virtual card usage during the next year. That was what their constituents basically said they were going to be doing, and another 61% said they plan to increase their usage of ACH. So, clearly people moving away from paper-based and moving to other types of digital and electronic payments.

So, our session today, session 2 is going to expand upon all of that. Talk about other alternatives, the distinctions between p-cards or purchasing cards and v-cards, virtual cards. And we’re going to talk about the benefits of v-card programs. We’ll also talk a little bit about some of the challenges around v-cards, because we know that there are always challenges with any type of change. So, of course, we’ll talk about that as well. You know, as Nikki mentioned, we do have one third session which is next week, next Tuesday morning, which will basically talk about the migration to v-cards, why now, what’s driving it, reasons to make the switch. And last but certainly not least, a case study of ACBB’s own migration to v-cards.

It’s a trilogy. I highly recommend that you participate in that third session. If you’re like me and you’re a Star Wars fan, you know, that the third part of that trilogy, Return of the Jedi, was probably the best. So let’s move on. And let’s do session 2, and hope to enjoy also session 3.

Do we have a hand raised there, Nikki? Did I see a hand?

No, it was me. I was trying to laugh at your joke.

All right. So again, our goals for today, you know, we’re going to talk about p-cards and v-cards. Why virtual cards may not be for everybody, but who does benefit from them, and we’re also going to talk about what’s next. So please join in, try to share and ask your questions.

So how far can you travel in the time it takes for your payment to clear? In theory, if you’re writing a check, you can drive from Seattle to Boston, still have time to stop for a photo opportunity in Niagara Falls. If you’re using ACH as a payment mechanism, again, you can drive from Austin to New York and take a stop to sleep and eat. I think that’s going to be a pretty quick stop. Especially if you’re talking about same-day ACH, but clearly there is a bit of a time lag, even with ACH. And last but not least, is card payments. There’s no time to go anywhere. Your money arrives in real time along with the valuable payment data that accompanies that payment. So again, illustration modestly humorous, to get you to realize that indeed moving away from checks and moving to ACH and cards is certainly the way to go.

So the payables solutions that you choose as a bank are going to really be determined by your suppliers, your partners and what you can negotiate with them. What is the best choice, if you will, not only for you, but for them as a trading partner. It could be paper, it could be plastic, electronic, digital or some combination of the above. Probably important to point out that it is pretty difficult to move to all one type of payment solution. It is much more likely that you’re going to have a combination of these choices. Again, depending upon your size and who your suppliers and your trading partners happen to be. But understanding the needs of those recipients is probably one of the most important discovery steps in determining what solutions to use. What’s going to work? Not only for you, but what’s the win-win? You know, and how can you help move, if you will, others to participate in the payment solution that you would prefer? Again, trying to get to that win-win. One other footnote here is that consumers tend to drive the business’s option for how they wish to pay. Maybe not as pronounced for a bank, but certainly for another business, a small business. Consumers, you know, are driving what the economy does, and in their need and their desire to have contactless payment mechanisms, so we can’t kind of overlook the consumer. Also a statistic for you from Deloitte that I just discovered yesterday, actually, about B2B payments in general. In 2020, there was 70 or, excuse me, $870 billion in B2B payments. Business-to-business payments that Deloitte is predicting that by 2028, which is really not that terribly far away, about six years from now, they believe that those payments will exceed $1.9 trillion. So again, the growth of these payments bank to bank, bank to supplier, business to business, is certainly huge. So again, certainly moving away from paper to be able to accommodate volume and dollar size of that nature, makes a lot of sense.

So let’s talk credit cards. They’ve been around a long time. If you talk about the inception of it, most people recognize that the first credit card was the Diners Club in 1950. So certainly quite a long time ago. Come a long way since then. Obviously now more businesses, most businesses, do have credit cards to make payments. It may not be a virtual card. It may not even be a purchasing card, but it might be a travel and expense and entertainment expense type of card for traveling businesspeople. On the flip of cards is the acceptance of cards. The fact that more and more merchants now exist than did before, you know, it’s not just for restaurants as was with the Diners Club. There are many more nontraditional merchants, people you wouldn’t have thought would accept cards. So it’s a give and take. We wish to pay using plastic, which means someone must receive that same transaction. So again that back-and-forth certainly has grown by leaps and bounds since 1950.

The virtual card, as a payment option again, as a one-time account number. And we’ll talk a little bit more about that. That is driving the trend for more cards in use, more usage of that type of payment. Fraud controls have improved dramatically since 1950. And that has again, encouraged much more business card usage. It would have been in the past that people would be concerned about handing a piece of plastic with the ability to charge, you know, any amount if you will, in any location to an employee of the company, would have been pretty frightening to most businesses.

The fact of the matter now, is that you can restrict those transactions on a card based on velocity or usage in a day, you can do it based upon the merchant category code that the card is being used, the dollar amount, and so on. So lots and lots of fraud controls there and ways in which to protect the business from any type of fraudulent activity. Integration with traditional accounts payable functions certainly is providing even more incentive for people to ditch checks in favor of cards. Again, that ability to make that card transaction look and act like the check that they love so much and that they are so accustomed to on the accounts payable systems.

Finally businesses need to make purchases online. Certainly the pandemic bore that out. More and more people were having to purchase remotely than perhaps ever did before and that included small businesses and banks. So, you know, the idea that you needed a card in which to do that and you didn’t certainly want to use a personal card made card issuance even more and more important. Anybody have any questions about cards in general? Business cards in general?

Okay, p-cards, or purchasing cards, have been around while, not a new product per se, and certainly was a step up from the traditional business card. It’s a really effective payables product. It’s got the convenience of a normal business card, but it has far more data associated to it. And that data is in the form of what comes with the transaction to be done for reporting, especially for government entities, municipalities, school districts, people who have a need to report more than just the dollar amount of the transaction and where something was purchased. It also has more levels of security and fraud control, again more robust reporting than a typical business card. Now, a purchasing card is typically a decentralized type of payable. Again, it’s distributed plastic. It is a physical card. So that card may be resident in the purchasing department of a company. It may be resident in multiple locations. If the company has more than one, it could be again, multiple individuals with different levels of ability to use the card. Again, something different for the owner of the company than it would be for the individual in a particular department. So it is certainly a viable option. Certainly better than a check, certainly has more security to it than even a typical business card. And it does have some options for integration into the standard accounts payable system. And last but certainly not least is the fact that there are rebate and reward opportunities with a purchasing card. In many cases, it’s an annual type of reward. It’s going to be based on spend levels. So again, depending on the size of the business, or in this case, the size of the community bank, who may be using purchasing cards, you’ve got to get to a certain level of spend and sometimes that hurdle is relatively high. So, you know, purchasing cards have a place. There’s absolutely no question about it. Again, step up, certainly from checks, step up from traditional business cards, and certainly used by many, many organizations, banks and businesses alike. Again. I’m going to take a quick pause here. Any questions on purchasing cards or comments from anyone who may be already using them?

Again, I’m going to throw out a little bit of a statistic here from Deloitte again, that I discovered just yesterday in some reading. Talking about business-to-business payments, and take an average of 30 days from inception to settlement. That’s a long time, again, in a check and environment or even in an ACH environment. You know, that that’s a long time. With a card, you’re typically going to shorten that  because you’re going to be entering that data immediately after you’ve made the payment. The other interesting statistic was that when you looked at the average cost for someone to make a payment, and we had talked about this in session 1, that it can be as high as $20 from the approval of the payment, to the initiation of it to the settlement, and reconcilement of it, could be as high as $20. Basically, 62% of that cost is labor. So, again, if you can reduce that cost and bring that down to something, you know, more palatable, any type of business, including a community bank, is looking to save that kind of cost.

So finally, what in the world is a virtual card. We’ve talked about ABCs, but we haven’t defined the actual card. It is a 16 digit single-use account, SUA, embedded as a payment option in the accounts payable system. So, the key here and the simplicity of it, is that it looks, acts, and smells, if you will, like a check. Much about the process is the same as with the check, which is already embedded in this part of that accounts payable system, old or new. Again, the beauty of it being that since it’s a single-use, it is not  distributed plastic and the potential for fraud is far less. So our simple definition is the virtual card is virtually a credit card that has become like a check, in being embedded into that AP system.

So let’s talk about what are the benefits. This is our B. What are the benefits? The number one is cost savings. Certainly with manual payments, again, being somewhere in that $20 range and again much of it being around the invoicing and labor cost with a virtual card, your costs are significantly less than that. And in fact, the virtual card program, not only provides cost savings, but it generates a rebate on every transaction. I’m calling it tax-free interest. And this is the case whether you’re talking about a business card, a purchasing card, or a virtual card, any kind of rebate or reward that is generated as a result of one of those programs comes back into the bank, comes back into the business as a revenue stream, but it, at least as of this moment, it is not taxed. So, Hallelujah, one thing that we get to enjoy as a business that actually isn’t that taxed by Uncle Sam. At least until they catch up with us, I suspect. And again, that source for that statistic about the $20 is listed there for you.

So cost savings is a big thing. Leveraging technology – again v-cards can integrate with a current financial accounting system or an accounts payable system. That integration and that work would occur with the assistance of ACBB and their partners. So that you as a bank, would be able to enjoy this new technology and be able to reduce or eliminate the need for checks. It wouldn’t necessarily disrupt your current AP process. In other words, the need to approve the transaction and all of the things that go around your normal accounts payable process continues. The difference being that the option for the payment rather than being a check or an ACH, is now a v-card transaction. So it isn’t as far out of the loop, if you will, as using a purchasing card, where there’s plastic and some more manual intervention involved.

Again, taking advantage of new technology is always a good thing. We, as bankers, certainly like to encourage our clients to use new technology. So we would be doing more of the same. Payment efficiency is another benefit. Enabling employees and a traditional physical or even a remote work environment to be able to authorize and initiate these payments, just as we all were forced to do in some cases or certainly had to make changes during the whole pandemic. This leads right into that. In other words, you know, it’s no big difference whether we’re initiating these transactions physically from an office or in our own remote work environment at home. Again, we’re increasing control and efficiency over those payments and the delivery of the remittance information that backs them up. So that the person receiving the payment is also receiving the important remittance information that they need to update their accounts receivable. Again, that win-win, remembering that what you are sending out and is being received by someone also needs to update their accounts receivable system. So we want to be given and taken there. And of course, this is an efficient way to do it.

They’re oh, I’m here.

And now I can’t hear you. Oh, oh.

Are you? I’m able to hear you Deb.

I can hear you too Deb. Okay. All right. I don’t know what happened there. I didn’t touch anything. Can anybody hear her?

Everybody okay?

We’re okay. I wonder if Nikki’s having trouble hearing on her side. Okay, it must be my system. I can’t hear anybody.

All right, no worries. Just so everybody else can hear.

So, last but not least on payment efficiency. Again, there’s robust reporting, ability to track and manage the metrics of the v-card program. And again, be able to see what have we done, what have we improved, and how can we continue to improve. So there are some of the primary benefits of moving to a virtual card program.

There we go. Hopefully everybody is seeing that slide. I don’t know what’s going on there, Nikki. Something went a little haywire, but hopefully, we’re okay. Alright. So again,

Some more v-card benefits. Vendors and suppliers. Again, if you’re trying to improve that partnership, that relationship with your trading partners, and moving to v-cards really gives them a predictable cash and data flow.

Hey Deb, I take that back. I think we did lose the slides. Oh, you did. Yeah, were you sharing or was Nikki sharing?

No, I was sharing. Let me look here. What’s going on? Alright, let’s try it again.

There we go.

Okay. Yeah, it looks like something blinked off, but oops, I gotta go backwards because it’s the wrong slide.

Here we go. How about there? We got it. That’s perfect. Yes. Okay, awesome technical difficulties. Never hurt anybody. No worries.

So we’ll keep talking about some v-card benefits here. Again, supply chain dynamics. Being a best customer has its benefits. I included this one because I like to be a best customer whether I am, you know, buying an appliance or, you know, I’ve got a service arrangement with someone to come in and help me with something in my home. Being someone’s best customer means that if you really are in a jam and you really need something, you are more likely to be able to get that assistance if you are a best customer. And again, what I mean by that, is that, you know, I am very, very diligent about paying my good providers on time or early, if you will, because I want to make sure I maintain that best customer status. That I’ll be remembered as being a good partner and that people will help me out. With today’s world and the fact that supply chain dynamics are really difficult for some of us, we can’t get things ofttimes the way we used to. Or perhaps not in the same time frame because we have difficulty getting things transported and so on. So if we as a bank, you know, want to make sure that the things that we need to do our everyday business, are there, we, perhaps want to make sure that we are a best customer of those vendors and suppliers by paying them appropriately. Paying them on time, paying them in a way in which they are, you know, benefiting. So again, to me that is a big benefit. Integrated v-card programs, again, it’s a best-in-class payables option. You’re going to get all of the things we already mentioned, you know, some cost savings and integration and so on. So, you know, being on the forefront of doing this as a bank is certainly to your advantage. Again banks who encourage their clients then to use v-cards become a trusted advisor. From a customer retention and new acquisition standpoint. Again, we’re switching gears a little bit here and not talking as much about the bank implementing the program, but once you’re up and running and now have the ability, hopefully then to sell the program as well. You know, you’re going to become a trusted advisor to your clients.

Again, banks like you or the ones who benefit from a v-card program. It requires forward-thinking, strategic planning, and being a successful financial professional. All of the things that we wish to be able to portray again to our clients and our community, you know, that we know what we’re doing, that we’ve done things the right way. I think ACBB and, again, being forward thinking and strategic and doing their own program first really is illustrative of this, that this is the way to go.

Okay, challenges. All right, there’s always those. With the good comes a little bad, and we know that that’s the case, you know, we’ve got to put the frowny face on there because unfortunately not all vendors will be impressed. We wish they would, we wish everybody would be impressed. But we also know there’s reality. In some cases it’s around cost.

You know, the vendor who you wish to pay with a v-card does not wish to be a merchant. They aren’t currently now, perhaps they don’t have other trading partners that are interested in using cards. So consequently, they don’t want to absorb that kind of cost or perhaps they just don’t even like the idea that that’s a process change for them, for their accounts receivable. So, in some cases, it could have actually damaged a trading relationship. You know, if you dig your heels in and say, hey, I’m only paying by v-card and, you know, that that vendor or that trading partner says well, I’m sticking to my guns because I don’t care for this and I could trade with somebody else. You know, now you’ve lost a trading relationship, so we don’t like to get to that point. And again, we’ll talk about some ways to mitigate that.

Other challenges. AP again, is going to your AP is still going to need to support all forms of payment. As I mentioned earlier, while we would love to get to all v-cards, it’s probably not practical. It may be on the AP side, but for employee payments, and maybe tax payments and some other things, ACH may be a preferable payment option and there may still be a few hangers-on on the check side. So AP will need to be set up in such a way to support all of the various types of payments. And again, moving to v-cards is not static. Change is ongoing. So, even though you negotiated now with your current trading partners, your vendors, it means that over time, you’ll likely need to renegotiate terms, depending upon you know, what they want now versus what they want later. So, and then you’ve got new vendors coming on that, you’re going to have to negotiate with. They may or may not be impressed. So it is not static. Not much is in this world today. So it is a challenge. It is something to consider as you look at the pros and cons of implementing a v-card program.

So, we can get to a happy face on these challenges, again, by trying to overcome some of them. On the merchants costs, perhaps there’s an opportunity there to either, alter the terms, renegotiate the contract, potentially even absorb a bit of the merchant cost in how you price, how you negotiate price. So there are ways hopefully to mitigate that. Again, you can, through new renegotiated terms, lessen the challenge of processing change as well.

When we say that we could damage the relationship – you may also improve the relationship. You know, is the glass half empty or half full? You know, again depending upon your skill set for negotiation and your ability to work with your trading partners, hopefully you can overcome some of these challenges.

The other thing to bear in mind is that if you were totally unable to move to v-cards with a particular vendor, ACH is really a great no- check alternative and is one that many trading partners will certainly accept. It’s been around a lot longer. It feels more like the acceptance of other payments. So it may be the way to go. If you can’t get exactly what you wanted, you can certainly move away from check by going to ACH. And again the idea that things are not static, change is inevitable. Again, if you can make that negotiation win-win for everybody, compromise and move from check to ACH if v-cards aren’t the option, at least you’ve made the opportunity available and perhaps over time as other trading partners start to work with that vendor and request them to move to v-cards, you’ll be able to make that change as well.

So, that was a lot of information. Do we have any questions? Any thoughts there? On both the pros and cons of v-cards? Nothing coming up there, Nikki?

Okay, I’m going to move a little outside of you as a bank setting up a v-card programs and talk about what’s next, as far as what you might do in encouraging your business clients to move to v-cards. A lot of banks have what they would call niches, vertical markets, specific segments that they focus on, in dealing with their business clients, and there’s a lot of benefit to that. It reduces your origination costs. You have higher risk quality. You can do relationship-based pricing and sustain customer relationships by focusing on a niche. An example would be a bank that I worked with at one point.

We fell into a niche, we didn’t necessarily think we were going that way, but we did go that way, we began to do business with a veterinarian practice. And we found that not only could we benefit from that relationship, because they needed a wealth of both credit and treasury management and deposit products, but they also belong to associations with other veterinarians. Not only in our local trade area, but throughout the state and throughout the tri-state area. We wound up through referrals becoming a quote-unquote expert in veterinary practices. It was great for the bank. Again, we kept our costs down. We understood the risks. We understood what we needed to do to lend to that group, what types of products they were interested in, how we could relationship price those products, and so on. So, if your bank has a strategy similar to that with any type of specific niche or vertical, what you may find is that whatever that strategy is, whatever those chosen markets are, the types of payables products that they wish to use could certainly include v-cards. And again, you’re going to maybe choose those verticals or those niches based on demographics, types of industry, you know, the types of loans, linkage to your current customers, which is what we did at that bank. You know, however, you’re looking at your marketing focus, including the various payables options, again, is it check? Is it ACH? Is it purchasing cards? Is it virtual cards? You know, it will drive some selection there, based upon those verticals that you’re either already involved in or those that you plan to be.

So, small business. Which we as banks actually kind of look like a small business sometimes or a medium-sized business. In 2021, a company called Cornerstone Advisors estimated that there’s a $370 billion opportunity to transform the financial lives of really underserved customers known as small business. And for most of us as community bankers, this is our bread and butter. These are the folks who live right down the street, whose kids go to school with our kids, and so on. SBA is basically saying that there are 30 million small businesses in the United States and that they employ almost half of the population of the country. So it may be small business, but it’s a big opportunity.

A lot of times banks will sort of shoehorn small businesses into consumer. That’s probably too basic. If they go to the commercial side, it could be too expensive or too complex. So it’s driving some of our small businesses towards non-bank providers, which obviously, none of us want. The reason for bringing this up is that you as a community bank want to serve this market and one of the ways in which you may do that is to offer something like the virtual card program to them as an option that, you know, perhaps would be overlooked or that some other provider would do and you would miss the opportunity. I’m basically calling this a vertical for all, you know, the idea that you would be able to introduce this type of concept to a small business, who is, you know, struggling with getting enough resources, human resources, as well as their supplies, and so on, doesn’t have a lot of time to fuss with things in their payables, you know, the ability to integrate and to be able to use a card-based payable and reap the rewards that we’ve already talked about would be outstanding for those small businesses. And again, looking at you as your own entity or your own business, it’s an untapped use of cards for both you and for your client base.

Again, a little bit of a statistic just to reinforce this idea of trying to retain your clients. This was a BAI Executive Strategies Report in October of last year that said a mere 2% increase in customer retention delivers the same financial benefit as a 10% cost reduction. So again, this idea of being able to retain your important clients, small and large business through innovation, and through being that trusted advisor, you know, can certainly do better for you than trying to continually reduce cost and cut staff and things like that. Just hanging on to what you already have. According to this report, they believe that banks don’t always manage this position that this kind of a silent attrition, you know, they’re very busy going out acquiring new, and some of the current clients are sort of sneaking out the back door. So again, we don’t want that to happen to any of our good community bank partners. So again, rather than spending the money, which they’re saying could be five times the cost to go out and get new – we know you have to get new – but you need to hang on to what you have. Perhaps  v-cards will be a way to do that.

Questions on any of that, anybody?

All right, I threw a couple of slides in here for fun, more than anything else. We’ve talked a lot about cards and so on. Just wanted to talk about some best in class. I mentioned the fact that I believe v-cards is a best-in-class. Here’s a couple of other types of companies that are sort of best in their class.

Chick-fil-A has a wonderful model, and in doing a little bit of research on this, there’s a bank in Topeka and Lawrence, Kansas, called Silver Lake Bank. It has five branches. It is a community bank. They decided that they wanted to embrace the Chick-fil-A process to be able to move their clients through the drive-in with smiling , accurate orders, and basically what their CEO said is if we tell customers were going to do something, we want to deliver just like Chick-fil-A does. So, you know, we’re going to keep it simple, but we’re going to deliver. I thought that was a great message.

The next one is the Ritz-Carlton, kind of a whole different end of the market. They have three steps of service at the Ritz-Carlton. They talk about providing a warm and sincere greeting, always using the customer’s name, and also bidding a fond farewell. So the head of the RC Leadership Center guide from Ritz-Carlton actually does a variety of training sessions, including for bankers, and she says that she believes that empowering those employees of banks, doing genuine care, and a penchant for hospitality are critical as we staff our banks. That employees in her mind are the heartbeat of every brand. I totally agree with that, which is why I used it here. And I think most of us, who have been in community banking for a number of years, we agree that it’s our employees that keep our clients coming back.

Last but not least is Amazon. The elephant in the room. Huge, huge company. Well regarded by most, and in this case a Norwich, New York-based bank CEO, NBT Bank says, he doesn’t want to be Amazon, but he does want to understand why are they successful, and how do they create a customer experience that customers want to see repeated. Now NBT is an $11 billion bank with 150 locations in New York, Pennsylvania and New England. They claim that their way is now to be active listeners. They use multiple customer surveys, touchpoints, and they adjust based on the feedback. Again, harkening back to Amazon, that if you do question them about anything customer service related, and I have this from personal experience, they are very, very attentive, which does make you wish to come back. You do feel like you’re their best customer. So again, just a few tidbits on things that hopefully make us better as community banks.

So, how did we do? We had some goals today to look at p-cards or v-cards. We looked at benefits and challenges of virtual cards, talk a little bit about what’s next? Not only for us, but obviously, for our business clients, who would be making these same types of accounts payable decisions on a daily basis and might look to us for assistance.

The real “what’s next” is obviously next Tuesday morning at 9:00. We’re going to round this trilogy out by not only wrapping up all of the benefits and challenges but also doing a real-life case study, where I’m going to be talking to Kim Housley and we’re going to be doing a bit of an interview back and forth on what has worked, what hasn’t, as ACBB put their program together.

Good morning, everybody. There is a question. Oh awesome. Amen. Yeah, that’s and Nikki’s still having a little technical difficulty, so I’ll step in here. A question from the audience came up that has to do with the interchange rates. And the question is, are the interchange rates for virtual card the same as for regular merchants? And I could probably start the answer there. So if you think about that, in the virtual card environment, the merchant solution, the merchant, the need for the merchant is highly automated very efficient, right? So there can be some variability to it, but generally interchange rates within a merchant program tend to be lower, you know, more competitive than, you know, general, you know, card, you know, on-site card presentment, and things like that. There are obviously variables. And the other thing that I’ve noticed with interchange rates is that there are opportunities when you get into large dollar, strategic payments, there are options that can be much less expensive in terms of the Interchange cost. So there’s quite a bit of variability to it. But generally yes, they are fairly comparable with what a typical merchant interchange rate would be. Awesome. Yeah, but if Deb if you had any other thoughts to add, please. No, you covered it. You got me there. Yeah, and I appreciate that. And obviously that is a concern and that’s why we listed it as a challenge that you know, you will get some pushback from folks who want no additional cost there. When you’re trying to do in that win-win is, you know, perhaps change the terms in such a way that you’re mitigating some of that new expense or getting rid of other expense that they had in the processing of the check. So basically educating them, you know, that if they’re receiving that check and they’re having to either go to the bank to deposit or they are depositing it remotely and so on and so forth, you know, they’ve still got to do all that work, if they accept the virtual card per payment, you know, some of that cost goes away on the receiving side. So, yeah, again, hopefully win-win.

Other questions?

Again, we sincerely hope that, you know, this was enlightening and did provide you with some B for benefits. I always have to do a few quotes just because that’s my thing and I am a bit of a fan of Mr. Churchill. So again, his quote: “However beautiful the strategy, you should occasionally look at the results.” You know, again, is in tandem with some of the things we talked about. We do need to be strategic. But obviously we need to continue to look at results as well. And one of the beauties of a v-card program is those statistics are there for you. And last but not least, “Success consists of going from failure to failure without loss of enthusiasm.” Again, I find that kind of humorous, but also probably very realistic, you know, we do try things and sometimes they don’t work as well as we would like. And they wouldn’t necessarily be outright failures, but we still need to keep that enthusiasm and keep trying. And keep doing better for our banks. Again, you have a great partner in ACBB. I’ve been very pleased to participate last week, this week, and now next Tuesday and get to know the organization as well as the folks on the line. So, again, hopefully this was beneficial and I will certainly entertain any other questions that anybody might have?

And Deb just I know if with Nikki not being able to kind of help with the closing, here. I would just like to Echo, Deb’s comments, and thank everybody for joining us this morning, we will be providing a link to the our website, where we’ll be hosting these sessions. So, please feel free to share them with other colleagues within your banks or other associates as well. Again, the session next week we’re really looking forward to, this is a really interesting opportunity. We are very excited about it in that it’s bringing a solution that has really buoyed the whole banking industry for 15 years into the realm of the community banks, and we couldn’t be more excited about playing a role with that. So again, if you have questions, feel free to reach out to us, and again, thank you so much for joining today.

Okay. Thanks Bill. Thanks Kim, Nikki.

Thanks Deb. Thank you everyone. Okay.

C is for Concepts & Case Studies, Why Now

Me just had a technical difficulty here.

Okay. There we go.

So, as Nikki said, this is the third session in our trilogy, hopefully will be the best as within many trilogies, a lot of times, that’s the case and hopefully this will be the same. For those of you who were not on either of the first two sessions, I am Deb Knox, principal of Knox Advisors LLC, and it is a treasury management advisory firm that I started back in March of 2016 after many years of banking experience in treasury, both product side and sales. Basically, my focus is helping banks with B2B product delivery, relationship building for businesses, product and process review, and also education. On that light I’ve been both a virtual and an in-person instructor for the Pennsylvania Bankers Association and also the Virginia Bankers Association. My hope is as I did with the other sessions to incorporate some of the expertise I have on the treasury side with businesses with also my knowledge of banks, having been a banker for so long and hopefully, that will guide us through this third session. Again, in the other two sessions, we built a background and a foundation, talked about different types of payables alternatives.

This session is really our enlightenment, our motivation to move to v-cards. We’ll talk about why now, you know, what is driving this integration of the use of virtual cards, reasons to try those cards, And, and last, but probably the most important is to talk about the ACBB case study and how the program worked for them, and hopefully will work for you. I am going to do a really quick recap here of what we did in the first two sessions. For those of you who were not part of that. We talked in the sessions about the key challenges of accounts payable, talking about the data and how we need to tie payments and invoices to update accounts payable records. Managing all of that historical information is obviously quite important. One of the other challenges is around security and fraud mitigation. Again, we’ll talk a little bit more about that today as well. But that is a big key is to prevent fraud. Cost control is on everybody’s mind always and probably now more than ever. Again, being able to reduce the cost of issuing a payment, that is a key measurement for folks and accounts payable. And last but not least is integration with other types of payment methods, with other systems, and within the financial reporting structure of a business. Again, all of these challenges of AP apply to businesses as well as as banks.

Great slide here, courtesy of ACBB about the basics again. What in the world is a virtual card? It is a 16- digit single-use account, single-use credit card, that is embedded in the AP system. So that when the invoice information is input and the process has begun and the payment is approved, it becomes a selection just as a check or an ACH or a wire. And again, hopefully that’s the way we are going to migrate the group on the line. We also talked about, you know, what were some of the reasons or what was some of the motivation to make the leap to virtual cards. So, we talked about cost savings, leveraging technology, and payment efficiencies. Again, we’re going to talk more about benefits today, but this was a recap of things that we did back in session 2. One of the key points here on cost was that a manual payment has been estimated by some sources as being as high as $20. So $15 for the actual invoice, cost manual costs and labor and whatnot and $5 for the payment. Given that, clearly moving to something less expensive is a big win, but moving to a virtual card where you’re actually generating rebate on those transactions is a real win-win again, in essence tax-free interest.

We talked also about vendors and suppliers gaining predictability of both their cash in their data flow. So hopefully improving those trading relationships. We talked about, it’s always great to be someone’s best customer and having done a negotiation, you know, for virtual card payment and being able to make that a win-win. Now, when you might have supply chain issues or challenges, that best customer may mean you get product and someone else doesn’t. So, again, a good thing.

And last but not least, we talked about challenges with v-cards, but we also talked about the remedies to those challenges. Probably one of the ones that comes up, maybe the most frequently is that not all vendors wish to be a merchant because their costs associated with that. Well, there could be an opportunity there to either alter terms or renegotiate the contract. It’s also a change for people receiving that payment on the AR side. So again, you know, renegotiation and trying to make it a win-win is a remedy.

We also talked about the fact that maybe v-cards aren’t for everybody. If they aren’t, ACH is a great non-check alternative again, moving away from the paper to virtual cards, if not virtual cards ACH.

And last on that list of challenges was that change is indeed inevitable. We know that even if you do go to a v-card program that not all of your vendors will make that move with you. So you will need to continue to negotiate that as well as with new vendors coming on. So it is not static, it is ongoing, but we know that you can overcome those things.

So that takes us up to today. And the goals for today. Again, as Nikki said, you know, if you have a question or comment, put it in the chat box and we’ll interrupt so that we make sure we cover everybody’s issues and questions. Today we’re going to talk about the why now, the reasons again to make the switch to v-cards and then, of course, talk about the case study with ACBB.

So the why now. COVID is gone but not forgotten. We wish it was completely gone. But unfortunately it isn’t. And the the essence of the pandemic is that it changed the way in which we work. You know, when you step aside from all of the other pieces, that that COVID affected obviously, the human element, and so on, and look at what it did to business. It is never going to be forgotten. I’m sure everybody had to come up with contingencies to receive their funds, to pay their funds, to manage their day-to-day work life. It really does mean that remote working is here to stay. There are many companies out there who have now chosen to continue the remote working and not bring people back to the office. Some are making  it voluntary to come back or to be back only a few days a week. But clearly, what what we found is that we can in many cases work remotely. And still get the job done. V-card program actually fits into that perfectly because there is certainly no need to be physically present to initiate the transaction. Any more than there would be to initiate an ACH. So again that certainly impacts the why now. Leveraging the technology. again, technology is changing rapidly, changed even more dramatically during the pandemic. So, let’s take advantage of that. Let’s not let that opportunity go by us, if you will. Again, no time like the present.

So let’s get into the reasons, what I basically dubbed as the six reasons to try v-cards. And they are basically an iteration of things we talked about in some of the other sessions but hopefully streamlined for everybody. And the first one is streamlining accounts payable, and the ability to eliminate manual tasks and reduce errors is certainly paramount for anyone in a financial position. Whether we’re talking about a bank or whether we’re talking about a business, we certainly want to have things as non-manual as possible, because again, if we are working remotely, if we are our working outside of a normal office, physical environment then we need to be able to make sure that things are as efficient as they possibly can be.

Under number two, reducing costs. You know who doesn’t want to reduce cost. That’s the name of the game today, with everything going up with inflation, the cost of fuel and so on, what we do want to do is make sure that the places we can save, we can do so without impacting the quality of our work. So, in the case of v-cards we’re talking about, you know, now we don’t need checks, which may be reduces the toner, reduces envelope, postage. And basically, some of the internal duplicity that we currently have in a paper environment, trying to get those costs down to not be $20, or at least not be the 15 of it, if you will, that is around labor. If we can reduce that, everybody’s ahead of the game. Also vendor and and bank credit reliance. We don’t really want to have that. And if that’s something that we’re depending upon now and incurring costs to initiate payments, that’s probably not a real good thing. So again, number two of our reasons is to keep those costs down.

Number three is unique in all of the payment options that we have available to us. And that’s the ability to earn rebates. It’s extra revenue, again, just for doing what you’re supposed to do. Very sweet, you know, the idea here is that, yes, you can earn rebates on business cards and purchasing cards to a point, but the opportunity with a true v-card program is much greater. And doesn’t really require any extra effort on your part. So again, that ability to pay yourself back, if you will and, you know, again, help offset the costs of your accounts payable process is certainly a good reason to make a switch.

Moving on to number four, increased security. Again, with all the goes on, now with fraud and with people being more and more creative unfortunately, in how they perpetrate fraud, this idea of having a single-use account number, that cannot be hacked, if you will, cannot be reused as it could be with a credit card, the security with a v-card program is really A number one.

Being able to make things secure that, we don’t have secure in a check environment or with a physical card is certainly very attractive. Again, not only to banks and the people in bank’s AP but also on the business side.

Number five is improving internal control. Again v-cards tighten that delivery of payment and data that is so important to everybody. It’s important on the AP side that we have the data tied so that again we can do all the proper reporting and so on and make sure that our AP system is up to date from a data standpoint, but it is also important on the recipient side, the person receiving that payment. They want the money, for sure, but they’re getting the data with it, so that they can in turn update their accounts receivable. So, again, kind of what goes out is also coming in. And you’re helping to improve the situation for your trading partner. Again, AP is going to be a hero hopefully with both the credit department and the treasury management department because of the fact that the payment and the data are now married together.

Our number six is better cash flow management. Again, the data flow we know is a good thing, but with that comes better cash flow. The more informed the Chief Financial Officer ,treasurer of the company is, the person who has to manage the daily cash position, the better off we are. So again, the data and the cash go hand-in-hand.

Payment predictability provides some internal transparency. In other words, when we know exactly when the payment is being made and we have that proper data flow, then everybody that needs to know that from the person who is moving the money to the person who is reconciling, again, to the leader of the company, or in this case, the leader of the bank, you know, everybody knows what’s going on with that payment. It’s very trackable and very visible. So, all good reasons again, compilation of the things we’ve talked about in prior sessions, but all reasons to move to v-cards.

Questions on any of that? Do we have any questions out there? I don’t see any yet, Deb. Okay.

Well then it’s my pleasure to introduce Kim Housely. Kim is an Assistant Vice President, Product Analyst at Atlantic Community Bankers Bank. Throughout her 16-year career with ACBB, Kim has experience in operations, client care, and the product and services departments. In her current role, Kim is responsible for the client count analysis, product pricing strategy, and product innovation. One of the most rewarding parts of Kim’s job is the opportunity to explore innovative products and services and then design a way to provide them to community financial institutions. Kim graduated from the Pennsylvania Bankers Advanced School of Banking in January of 2021 and is currently attending the ABA Stonier Graduate School of Banking with a graduation expected in June. Awesome background, Kim. And Kim is basically going to be walking us through the journey that ACBB took in implementing their v-card program.

As we go through this Q&A, feel free to ask your questions, that we make sure that we’re answering all of those and you get the benefit of everything.

Thank you, Deb. Thank you. Okay, Kim, first question. So, tell us how you got started and what challenges you encountered when you began the v-card journey.

So we had a change in our leadership team and the new executives, they came from larger financial institutions. Our new head of sales had 15 plus years of experience in the commercial card, p-card program space and he knew how a beneficial card program was to the larger banks and wanted to bring that benefit downstream. Our biggest challenge was educating our own internal team and members of our board on the concept.

I can imagine that, that’s always the toughest part is getting our own folks to kind of get on board. But it sounds like the executive team was involved in the process.

Yes. They were. The executive team is key to a successful program. Without their support, it’s difficult to get the organization to accept the change in process. Again, it all comes back to the education.

Were all of your internal folks on board or did you have some dissenters in the ranks?

For the most part it took some study education over time to convince them all that the program was viable. So patience and persistence are key. I say that all the time here. It was key in getting our team to make the change over to the card. We did have the support of executive management and that was essential and breaking down the resistance to change. We also had a lot of statistical data to back up the need for a card program, and all of these things combined really sold the team on the change over to the card.

I’m always fond of the idea of a do-over. If you could do it differently, would there be a do-over in those early stages?

Absolutely. We’d do it faster, you know, unfortunately, unfortunately in the regulatory environment that we are in, you know, we really have to be cautious and really weigh our risks in everything that we do. So we took a very thorough approach to addressing such a strategic partnership with a payments-oriented technology partner. The good news is our patience paid off and we have a highly sustainable solution and we’ve done the legwork now, so our clients will have a much lighter lift.

Excellent. Excellent. Anybody with questions before we go on? Okay. So who is the real champion, Kim, of the project?

Our product development team championed the project, but the leadership team and the enthusiasm especially from our finance and our accounting team, that was paramount in the success. With their support we were able to build the card program into our company culture. Our biggest champion turned out to be some unexpected spend from our IT department. So again that all came from really continuing that education, patience and persistence, and building the virtual card into every conversation that we were having.

Was there an actual project team then?

So there was, so Bill and I really, of the product development team. we headed up that project , if you will, and then we pulled in those key stakeholders to really sell the rest of the team on the product itself.

Awesome. Okay. Were there any unexpected benefits that surfaced during the process?

Yes, so it caused us to take a step back and review, our overall accounts payable policy and how we were able to or how we were currently processing our payments. Through that process we were able to modernize not just our payment technology but our overall approach and policy for accounts payable.

Awesome. I would imagine, and I’m not going to pick on anybody on the line, but I would imagine that there are folks who haven’t looked at or touched their AP policy in forever. And again, with all that has changed, and how we do things probably, no time, like the present on that one as well.

Absolutely, for sure.

So have you had strategic vendor relationships change as part of the v-card program?

Our vendors that are truly strategic, you know, they already have adopted card payment. So those are the easiest ones to enroll. Other vendors can be reluctant to accept the card, you know, because of the increased costs you that we talked about before. So it really came down to educating our vendors and reinforcing the value of the automation and the reduced risk. We’ve also been willing to offer more favorable terms to some suppliers if they’re willing to accept the card. All told I think we’ve distinguished ACBB as an innovator when it comes to payments. A vendor that says no today may very well say yes tomorrow. So the more that you educate your vendors, the more successful your card program will be.

Makes sense to me, when you weren’t able to migrate, someone to v-cards, were you successful in moving at least a portion of those to ACH?

Absolutely. Yes. ACH is always our second option when possible.

Excellent. So if you had to share the most significant plus to implementing the the card program? Is there one or more, probably there?

Yes, I would say, most importantly was the learning experience and being able to bring this card program downstream to our community financial institutions. Some examples are being able to interpret the analytical data and assisting with the integration of the card program into the core processor.

Excellent. Again, we’ve talked about benefits and pluses, and so on. Have they been internal, external, or kind of both, those benefits?

The benefits have been both, but again, timing-wise, you know, we rolled this out during the peak of the pandemic and we were, we were nearly 100% remote work. Right? So this really worked in our favor at that time. It helped us eliminate hundreds of manual paper checks. And it created far fewer hours that we had employees in the office processing those checks. Of course, a successful program also creates a meaningful revenue stream, right? And that income is helping us to fund other product development and process refinement initiatives here at ACBB.

That’s excellent. Yeah, we always like we always love found money, right?

That’s right. Exactly.

Very good thing. So, obviously your experience would certainly be able to help you and implementing a v-card program for others. You know, you have some insights there as to how the folks on the line and others might might get started.

Absolutely. We intentionally ran this program for ourselves first so that we could educate ourselves and we’d be better position to help others Implement their own programs. The fact that we were behind, you know, in terms of our policy and our process means that we’ve gained the first-hand knowledge and experience that we’re finding was transformative not only for us but in helping others with their program.

Excellent, and I believe you’re prepared to share a little bit on financial highlights of the program?

Yeah. We can do that. So our initial analysis of our own spend produced a figure of about a million dollars that we could move over to the card program. What we’ve found throughout the industry is that pretty much if you’re about a billion in assets, you can move about a million over to card. Another statistic that we found is about 15 to 20% of your non HR payables, you can use as a benchmark that you can likely move over to a card program. So we use the figure of a million in spend when we were negotiating our rebate with WEX to date. We have exceeded that million in spend that is mainly due to some unexpected IT equipment purchases that we were able to put through the card program. But again, that really came down to integrating the card program into our culture. Having that conversation. In every meeting that you’re in, you know, project meetings, when the subject of spend comes up you have to say, and let’s pay it on the card, you know, just continue that conversation as often as possible. That’s what really made us successful in our program.

We also consider the money that we have saved through the enhanced efficiencies and not having to produce those paper checks as money earned, right? And then, in order really, to keep our spend up, we are continually evaluating vendors, enrolling new vendors, and enhancing our program.

Awesome. It sounds like all of those challenges that we had talked about last week and reviewed again this morning, you’ve certainly been able to overcome those obstacles. That’s awesome.

Yes. Thank you, Deb.

Anybody with questions on the financials here? I would think this might spur some discussion. Any questions out there?

Yeah, so this is showing here, Deb, that 15 to 20 percent and then about a million to a billion.

Awesome. Okay. All right.

Well, if we get any questions, I don’t see any coming through yet though.

Okay. So next steps, Kim. If someone is interested in jumping on the v-card program, what would the next thing be that they would need to do?

Reach out to us. Reach out to your relationship manager, reach out to client care, reach out to me directly if you need to. We’re here to help you. You know, I recently assisted a client with extracting the AP data from their core processor. So that’s what we’re here for. We’re here to help you guys and that’s really the first step. So if you’re interested, work with your core processor to get that AP spend out of the system reach out to us and we’ll take that spend information from you and see what we can do for you.

Who would you suggest be involved in the early, you know, moments of all of this on the client’s end, on the bank’s end.

It definitely the finance department. They’re going to know the most about the accounts payable, and then we’ll pull others in once we receive that spend analysis back from WEX.

Makes sense. Okay. I know you’ve already talked a little bit about some of the assistance that you would provide, but is there anything else there that you would like to share?

I don’t think I have anything else. No, Deb, thank you.

Okay, anybody with other questions for Kim? This has gone way faster than I thought it would.

Sorry. I was fast.

No. No, I’m and I was sure we were going to open up for some questions here, sort of surprised. Anybody? Any other thoughts? Should we allow Bill to talk if he wants to talk?

We should allow Bill to talk.

Yeah. Again, thank you so much for joining us. This is something that we’re really excited about. This is this is bringing something that has really kept the treasury management industry vibrant for the largest banks, and now we have an opportunity to bring that capability to community banks. Which is just vital. And as we’ve learned about this program and can bring expertise and confidence to your institution, we like the thought of that same process, where, as your institution embraces this capability, you’ll be in that role to be able to guide this kind of solution into your business bank audience to your to your business and middle-market companies that are that are your customers. So that is that is again, really exciting in terms of differentiation driving fee income. It just, you know, it’s very strategic. Kim mentioned the vendor analysis. So once we work with you to obtain that 12-month sample of your AP activity and we can share that via secure email and so forth. So that, you know, it’s managed very carefully. The information we come back with through this partnership with WEX where we come back and really analyze down to the vendor level who we expect would likely take the card, who we expect might take a little bit of hand-holding to take the card and where it might be a little bit more of a negotiation to get that card in use with that vendor. You know, it’s going to show a an ROI if you will, in terms of, you know, does this make sense? Whether it makes sense or not, it’s an opportunity to learn a lot about your vendor base and the potential for the opportunity, you know. And so again whether or not it’s something that makes sense to move forward with, you know, remains to be seen you will come away from the analysis and evaluation with some really, really important insights about your customers about your vendors, and suppliers partners. So that that exercise is very, very worthwhile.

That’s an excellent point, Bill. I mean everybody wants to know more about their own client base and sharing that data then not only with a financial folks, but the people who are negotiating, the vendor relationships would probably be quite eye-opening. I would think, you know for the bank.

Yep. Absolutely, you know at the end of the day, what the virtual card does is it adds a tool to your quiver of of solutions? And not the least of which that tool can be a negotiating tool, right? So imagine you’re in, you know, the final throes and again in this environment that we’re in supply chain, you know, many would say that your suppliers and vendors have have a bit of an advantage right now. In that, you know, there they can claim, you know, their costs are going up, they’re going to pass this along, and we’re seeing that every day in the discussions were having. You might say this is a terrible time to you know to try to add cost to that equation for a supplier. On the other hand, what this does is brings a negotiating tool to bear. So maybe you’re going back and forth over a, you know, a three to five percent increase on a contract for three to five years of back and forth and back and forth. Now, there’s one more arrow in the quiver to say, you know what? Okay, we’ll take that deal. We’ll do 3 years. You’ll agree to accept the card as the payment mechanism. It’s a win-win. So it’s just we see in the negotiations we’re having directly with some of our partners. We see that with clients in their interaction with their vendors. And so it’s just it’s above all, it is a tool to add to your arsenal of, you know, solutions as you’re out in the marketplace, negotiating with suppliers, partners, and down the road, a solution for your your business customers.

Absolutely. Do we get any questions for Bill or for Kim?

I don’t see any, no.

Okay, as an aside, one of the reasons of many that I began my relationship with ACBB in being able to help share some insight here on the v-card program is that I was impressed with the fact that they tried it themselves. So often people begin to market products and and we know the features and benefits and we think we know the challenges and so on. But there’s nothing like the experience of going through something like this yourself before you introduce the concept to those that you wish to help, to your clients. So I was duly impressed by that. I would hope that that all of you would be as well. So again no time like the present to plan for the future. I am going to make a bit of a migration here and talk about how the v-card program once you’re up and running and you’re familiar, you could then translate and do the same as ACBB did and begin to offer the product to your clients.

So again, just a little bit of statistic here from the financial brand.com from the end of last year. I thought this prediction for the future of banking was quite interesting. 75% of the execs who were surveyed expect a fintech or a big tech firm to be a top ten financial institution in less than a decade. That can be frightening. It can be an opportunity. It can be a lot of things, I suspect, but clearly we as bankers are beginning to feel that pressure that we may not be alone anymore, that we may have other folks joining our ranks, you know, in a very big way or merging together with some of our larger institutions.

I like the second part even better, that survival will not be defined by cost-cutting alone, but by innovation and serving customers with a challenger mindset, again much more like a fintech than a traditional bank. So again, sort of predicting the future of banking and saying, look, you know, we’ve got to be innovative. We’ve got to do things differently. So doing something like a v-card program yourself,  again before you would offer it to your clients, who are looking at it and asking for it, would certainly be along the lines of what we’re seeing here in this survey. You know, setting that strategic course for yourself in treasury management payments. Most of you probably aren’t old enough to know who Rogers and Astaire are, but it is a dance routine, if you will, it is a marriage of dance. And what I’m suggesting here, is that your payment vision, when you’re looking at the types of payments that you use and the types of payment options that you’re going to offer to your treasury management clients, v-cards are going to be very, very strategic in that vision.

P-cards were impactful. ACH was certainly impactful back in the day, but now v-cards are really much more strategic and will fit into not only the way you do AP, but also the way your clients do. Again, as you’re forming a payment strategy for treasury management clients, you want to be inclusive of all types of payments and you really should have a payment strategic plan. That makes sense. You can build it yourself, which may or may not be advisable. You can partner with others. You can leverage all that new technology out there. In this case, you would be partnering with someone you already know and trust, ACBB, as part of your payment strategy.

Again, as you’re setting that course for yourself and your clients, you know, give them what they want. There are many, many business clients out there clamoring for v-cards. They’ve read about it. They’ve heard about it. Larger banks are pitching it to them. So regional banks and community banks need to get on the bandwagon there and be able to offer the product as well. It is not something that only the big guys can do at this point. So from your smallest big business client to your largest, they are asking for additional ways to make payments for all of the aforementioned reasons that we as bankers, you know, wish to make changes, our business clients do as well. And again, that’s around fraud mitigation. That’s around the efficient transfer of the data with the money, certainly cost control and integration. The real key here is, there’s also that new revenue opportunity. The idea that you can get a rebate and that that can offset other costs or that can defray the cost of making payments is a great opportunity. I’m going to stop there for a second. Kim, Bill, did you want to talk at all about the rebate program? How that works? I don’t think we focused as much on that for. Is there anything there that you want to share?

Deb, thank you. I would just say that as we go through and evaluate and analyze the spend patterns. Your AP spend patterns, the, the the, you know, that that is going to be a big influence on the on the rebate and it is a portion of the interchange that is accrued and paid to, you know, your institution, you know, on a, on a periodic basis. Again, that’s something that’s negotiated upfront in this in this process with us as we as part of the evaluation of the, you know, the spend levels and patterns and acceptance rates that we see.

Sure. Okay. And as you say, that is something negotiated, which would set it, perhaps, apart from the types of rewards people are accustomed to on a traditional business card as an example.

That’s correct. Yeah, it’s simply a the same number for everyone. That’s correct.

Anybody have any thoughts, questions on that?

Okay. I can’t believe it but we are almost at the end again. I had hoped for some more interaction around the interview, because that really I believe, although it is the third of the three goals here, was the primary goal was really taking a look at that case study looking at what works, what doesn’t work. Again, some of the bumps there that that you might have encountered had you ventured into a v-card program without the benefit of ACBB. They’ve already had those little trips and stumbles for you and now can help you get going from there. Again, we went through many, many reasons, not only in this session, but in the other two of trying to make that transition, and again the why now is, you know, why not? There’s so much going on these days and that ability to control costs and earn rewards and be more efficient in what is now a remote working world is certainly a good thing. So I think we hit the high spots. Again, I’ll take any questions, comments. Thoughts that Kim, Bill, anybody else has here before we close.

Deb, I’ll just say I know it is early, especially for some of our guests. We the relationship managers your team that’s that’s a working with your with your bank, they are intimately familiar with the virtual card program. We’ve done, we’ve been doing internal training for, you know, the better part of a year and a half. So your team is very much up to speed and versed on the solution and they are an excellent point of contact for some of those questions that may have come up this morning. So please feel free again to reach out to Kim or me, but feel free to reach out to your relationship manager, your lender. We we have been very very thorough in terms of making sure that our team is really has a thorough understanding of the way this, this works. So don’t hesitate to reach out to us. Thank you.

Alright, Bill, Kim, and Nikki know that one of my deals is that when I do instruction for PBA, VBA, banks, in general, I love to impart little things, especially at the end. So this one is my take on the 7 Habits of Highly Effective People, which was something that Stephen Covey wrote back in the 70s, believe it or not. I just threw in there. Treasury management people, in this, it can be any kind of financial people or just people in general, the seven habits. The first one, take initiative, be proactive. We’re asking you to do that here, you know, if you feel as though v-cards are the things for your or is a solution for your bank, take that initiative and reach out to Kim and to Bill and get that proactive habit going, if you will. Habit number two is begin with the end in mind and be goal oriented. Obviously, the goal in mind and the end for a v-card program would be to enjoy all of those benefits that we talked about. So even though, again, there could be bumps here and there, we begin with knowing that this is our ultimate goal and we’re going to get to it. Habit number three, put first things first or prioritize. That’s always a good habit. Again, regardless of what you’re doing in the bank or in life. General keeping those priorities straight doing first things first. Habit number four, thinking win-win. We mentioned that comment throughout today, seeking mutual benefits. Again, not only in v-card programs, but pretty much in any negotiation you do. If there isn’t some give-and-take, if there isn’t some benefit to both parties, someone walks away unhappy and likely that will not be a long-term relationship. So, again, thinking win-win is habit number four. Habit number five is seeking first to understand then to be understood. Again, as I taught sales over the years, I would say to people, you know, remember to use the things on the sides of your head: Listen. Listen and hear what people are really trying to tell you before you speak before you like the sound of your own voice or whatever. So again that that idea of, you know, understanding first, and then sharing. Habit number six is collaborate to create possibilities. We’ve talked about lots of collaboration during this session as well as the other two. The fact that, you know, you need executive team support and you need their guidance. You need to include people from other areas of the company. You need to make sure that that collaboration is what really results in good possibilities. You can’t think of everything on your own, folks, in product can’t think of everything on their own. They really do need that collaboration with the other stakeholders that are involved in a project or a process. Last but not least is habit number seven, sharpening the saw. It’s essentially to a small degree what you’re doing today. You are listening, learning, trying to get new information, trying to up your game, if you will. Again, the kind of that self-renewal, the idea that we should always be learning, regardless of our age, regardless of the position within the bank and what our responsibilities are, but continually trying to improve. So hopefully those things will help you as well. A little reminder. Maybe go back and pick up Covey’s book. It is a good read.

And that is it and we are done early. Which is probably to the delight of most because I know everyone has busy schedules. Hopefully, we covered everything that you were looking to gain from these ABCs. Again, if there are questions, we’re going to stay on the line here and answer anything, that that you all may have. Kim, Bill, anybody with final thoughts?

I just want to thank everybody for joining us today. This was wonderful, and thank you for the entire series, Deb. This was great.

Thank you. Thanks for the opportunity. I enjoyed it thoroughly. Maybe we’ll do it in person next time.

That sounds wonderful.

Anyone else? Okay, enjoy your beautiful, Wednesday, Tuesday, Tuesday. I’m on the wrong day. Have a great day everybody.