Susan- 0:04
Thank you all for the final stretch of the conference. Really appreciate everyone joining us here for our discussion on how you can leverage your banking partner to help with workflow and cash management optimization. So, to kick us off, let’s dig into the agenda, we’re going to focus our comments to start on the factors that impact cash flow and cash management. Then we’ll talk a little bit about the trends and commercial payments in the future state. And then we’ll roll it up with ways that your banks can really help in the effort to optimize working capital.
Susan- 0:40
So of course,we have to kick ourselves off with a little about us at Commerce Bank. So commerce is geographically dispersed across five states in terms of physical footprint, we actually have a commercial office right down the street here in Nashville. And, and we are the 41st largest bank, in terms of size in the US, however, we weigh out, play our weight class in terms of commercial payments. So we have a commercial payment representation across nearly every state. And what you see at the bottom of the slide, there is our payments continuum. And so that’s the spectrum of commercial payment services that the bank has to offer, from the most simple to the most complex. And that’s really where Sarah and I fit into the picture. We work with our commercial clients and commercial payments, meeting them wherever they are in that automation spectrum, helping them get to where they need to be to accomplish their cash management goals. So let’s start by looking at factors that impact cash flow and start with those that are somewhat external or outside of one’s control. So some of you may have seen the association of financial professionals at the start of the pandemic conducted a survey and they surveyed 500, corporates ranged in size from 250 million to 5 billion. And they asked those corporations, how many of you have a documented cash management contingency plan, and nearly 40% of those surveyed did not. So factors when we had that economic downturn, or recuperating from an economic downturn, such as the supply chain really hit folks, and they were concerned about their vendor buy buy ability, they were worried about tax implications with regard to impacts on funds transferred between countries, between companies, certainly, that’s a concern, political turmoil that we’re experiencing today, and how that impacts cash flow, specifically, when it relates to foreign currency, exposure risk. And then lastly, the natural risk of a pandemic. Clearly, when you’ve got a health concern, as we did that comes on suddenly no way to predict and impacts nearly every facet, right? The impact that that plays on cash flow, visibility to cash, as well as the proper application of cash can really be impactful. So flipping over to factors that are more so within a business’s control. So one of the things that’s been talked about quite a bit during this conference, right is, how do we manage our talent? You know, we’re going through the great resignation. And so one of the things we’re talking more and more with companies about is in particularly in the treasury space, right? How can they, how can companies remove some of the road or mundane procedures that are in place today and try and make the work more meaningful, it’s about making the work more meaningful. And so I was talking with a company in St. Louis, a couple of weeks back and and they’re short staffed, they’ve experienced some turnover, and they’ve hired some part time help to get them over the hurdle. And so one of the challenges of debt certainly is it’s expensive, but it’s really brought to bear. Okay, you know, for my long term projection here, how can I automate? How can I automate what I’m doing to help not only those folks that are still around right and holding down the fort, but to help with their longer term projection? Another factor, of course, that impacts cash optimization is disbursement of cash among financial institutions. So as we all know, gone, gone are the days right where physical proximity to a bank branch matters, it doesn’t matter. But we do still speak with customers that for a variety of reasons have to have cash, right dispersed across a number of financial institutions. And sometimes it’s for credit reasons or sometimes as for services reasons, but one of the things that’s interesting is to periodically take a look at that and assess why your cash account structure looks like it does and do the factors that once mandated that you you keep funds separated, if that’s truly the case today or not, because if it’s not cash, think about it. With the benefits of consolidating that cash, in terms of cash positioning and optimizing use of their cash, centralized versus decentralized accounting and Treasury functions can certainly make a big difference. And one of the ways that makes a difference, of course, is in the visibility of cash, the pooling of cash, and how that’s managed. And, and lastly, internal policies. So, you know, particularly right, we’re in a rising rate environment, it makes sense to refresh dust off the investment policy and just kind of see if it still suits what your company is looking to do. Additionally, we’re seeing people look at their investment policy as it relates to ESG issues. So looking at your investment policies, your borrowing policies, but also your payments, practices in terms of risk mitigation. That’s another area that we see folks really focusing, and asking banks for assistance, and how we can kind of help with that.
Sara- 6:01
So I’m a visual person, and I’m a lot louder than Susan. Wow, hold on back here. So I also did not visit the hydration station this morning. So I’m gonna reference my notes, perhaps throughout the rest of the discussion today. But I guess I wanted to start out with just some data and statistics. So I had found a white paper on payments.com, I think March of this year. So I pulled a few pieces of information. I know it’s hard to read the screen, so I’ll kind of talk through it a little bit, but wanted to have some audience participation this morning a little bit. So show of hands, how many of you feel like invoice reconciliation and ERP payment integration are a challenge that you are seeing in your organization’s a couple of you? Yeah. All right. So how many of you maybe are down the path of solving for that with your partnership through HighRadius or maybe researching how to solve that? Anyone? Yeah. So I’m moving on to the next slide. So 92%, that number doesn’t really shock me. 92% of organizations still accept paper checks. However, 37% say they’ll continue to use paper checks, no matter the cost. Checks are costly. So not just the printing, the mailing all of that’s associated with it, but managing that risk and managing the manual reconciliation pieces. So that was really shocking to me. Does anybody else feel like that’s kind of crazy? Yeah. So one area that commerce has made a top priority is updating our payment and technology capabilities. So including a focus on our partnerships in the technology space. So we actually went through a recent upgrade of our core banking system, partnering with terminos on that, and then also continuing to explore and expand our partnership with HighRadius. And I think Susan had touched on that, but we’ve been a partner with HighRadius since 2017. And really find a lot of value that we can bring to our clients through that. So our clients come to us with a need to be agile, and provide more than just an online platform or payment processing capabilities. So down here, seeing that only three out of 10 financial institutions are able to provide their clients the offerings that they need really reiterates the importance of knowing your financial partners, so in the technology that they can provide. So that 79% number is another shocker for me. So fraud and risk are two words that really come up in every conversation that we’re having today. So seeing that 79% of organizations feel that their lack about automation puts them in a heightened risk for fraud would really lead me to believe that automation is moving to the top of priority lists and strategic initiatives for businesses. So audience participation, again, how many of you really have moved automation up your list of priorities over the last year or so? So people , processes and technology. These are three pillars that we really see as a focal point for a lot of organizations that we work with. I think there was an entire session on you know, talent retention. Yesterday, the day before, so people are the backbone of our organization. And you guys know better than we do, that the challenges were faced in retaining the talent. So we have to provide the tools and the resources that our employees need to be successful. So one key is looking for ways for process improvements. So I think the key that we need to focus on is talking across business lines and departments. This can provide efficiencies, provide cross training capabilities, and most of all agility in a lean work environment. So having that automation mindset, really can leverage data and payment technology to automate the manual tasks and day to day activities. So allowing your staff to utilize their expertise on more impactful projects and responsibilities. Many of our clients come to us to try to solve for those to solve for their financial needs, and solutions powered by HighRadius such as cash apps, and credit and collections provide the automation they need for success. So how can we reduce the process complexity?
Sara- 10:55
So let’s take a look at the big picture. What data do you have? What data do you need? And who does it need to go to so it takes collaboration across business lines to align and determine these key factors for optimization, leading us to the consultative approach. So Susan is going to talk a little bit more about that on our next slide. But really, conversations internally, with your departments to review and analyze your current processes, and what that future state could look like. Utilizing your external partners for a different perspective. And recommendations could be a really valuable asset for your team. So then we go into the technology piece, once again, they all kind of flow and intertwine with one another. upgrades, updates and conversions. It’s always one of those that we’re talking about in our organizations. So bringing in all of the aspects of your people and your processes, pillars will allow for the organization to determine the best fit the resources needed, and the timelines you need for that implementation. So the management of your external relationships with your strategic partners should begin with asking how are your partners adding value to your organization, not only with the solutions we can provide, the services we can provide? And also that competitive price point. But do your partners understand your objectives,your priorities, your future state plans? Are they a part of your discussions to get you where you want to be? And are they working for you?
Susan- 12:40
All right, so hand in hand with that, as Sarah mentioned, one of the ways that banks can provide value to our customers is providing that external source, another reference point for you, in terms of process flow. So one of the things that we take very personally, is how we can assist our customers with where they are currently. So you can have a conversation with someone, sometimes you do, and you talk about, oh, well, to what degree are you automated? And they may say, oh, yeah, we’ve got this all figured out, we were quite automated. And then you sit down, and you spend time, and you talk about what that really means. And what you find often is that automated may be a series of downloads from the big series uploads, that means Excel spreadsheets, and it really isn’t as fine tuned as an organization may optimally want. But if you’ve been doing the same thing for some time, right, maybe you haven’t stepped back to reflect on that. And so one of the the tools that we offer is what we call a deep dive with our commercial customer base, to truly understand where they are, and sit down with folks in the accounting team in the finance team to see the posting of the receivables to see how they’re approving those invoices making those payments, what tools are they using? What systems are they using, and talking to the day to day folks to truly get a sense of where the pain points are? So one of our favorite questions is if you could wave your magic wand, what would your, you know, banking processes look like? And by asking some of those pointed questions, it really helps you better understand the organization’s goals and things possibly that they thought were just, you know, gravity issues, right. This is the way it’s got to be and there’s nothing that can be done but but in some instances, there’s quite a bit that can be done in your banking partner, as someone that banks with clients across industries often have seen similar ERP systems and similar structures can really give some some of the best practice guidance and advice. So as Sarah had reference, that’s one of the ways that we really try to come in and add value. And I was recently speaking with a client. We have done a payment cycle review, to have their finance and Treasury professionals have a team of like eight who had retired and so they’re trying to determine okay, how do we manage for this and so they were really looking for autonomous automation tools. So sitting down with them understanding their processes recognizing where we could add value. And that’s really where I think banks are such great partners and supporting our clients, alongside fintechs. Because when you think about fintechs, and you think about cash, everything we’ve seen these last few days, three days, and the technology, that these fintechs are very targeted in a very targeted way, problem solving. That’s fantastic. And what value the bank adds in partnering with that Fintech is that we understand the holistic customer relationship, we understand the workflow, and so on partnering with a FinTech and as Sara described, commerce, alongside HighrRadius offers the full suite of solutions. So often we talk to clients and, and and they think, Well, gosh, this makes a lot of sense for me. But where do i Where do I begin, you know, what module do I start with? How is this going to fit into my overall workflow, and that’s where banks with our purview and the holistic account infrastructure can really be a value, because we see that bigger picture, and we can help advise in terms of what we’ve seen work well elsewhere, but our own in depth knowledge of that company, the goal, the workflow, the downstream impact. So we found that we’ve been very successful in that regard. Alright, so looking ahead, right, what does the future hold? So there’s, there’s assessing your current state, there’s assessing where you want to be. And then there’s looking forward, right, and thinking about what other factors are out there that are under consideration? So these are some of the things we’ve been talking with, with our corporate clients about and a start up talent retention, right. Again, we’ve talked about that before, how can we make work life more meaningful for employees? How can we help them feel like they’re more a part of the strategic direction of the company, and really meaningful for us and meeting the companies and goals? And that’s, again, where it comes to workflow management, restructuring jobs in a way that makes sense for people. And again, that’s where payments automations can really help treasury and finance teams.
Sara- 17:01
I think about the conversation, Susan, but also when you are doing those assessments, that ROI, like, you know, does automation, reduce those hours, those overtime hours, or allow you to use one FTE and move them to another area that is more, you know, technical or needs more resources?
Susan- 17:21
Great points there? Absolutely. Absolutely. Faster Payments, so real time payments in the Feds faster? Payments network. So, you know, gosh, in the future, right, we’re not going to be looking at a more nine to five payment schedule, we’re going to be getting payments around the clock. And we’re seeing a little bit of a glimpse of that right, even with the expansion of same day ACH and larger dollars and getting those in later in the day. So how is your company equipped to work with that risk mitigation, fraud risk continues to be such a concern, if there was a recent consultant survey that went out that gosh, double digit growth of CEOs that were concerned about cyber threats being the greatest disruption to their companies meeting their growth projections. So I mean, that’s, that’s a real concern. And we talk to clients all the time about fraud mitigation techniques, such an important component when you think about your cash flow in your commercial payment strategy. ESG and environmental, social and governance factors are seeing in companies that that’s even being a factor and incentive plans. So think about how that factors into your own investment plans and policies, digital currencies, 18,000 active cryptocurrencies currently. So thinking about from the corporate perspective, what your stance is going to be with crypto, you know, are you going to hold crypto? Are you going to allow transactions in crypto, what does that look like? And then lastly, automation and integration. So again, as we’ve said, there is so much happening in today’s environment, factors, both internal and external, right, to varying degrees of control. But one thing that we know is that payments are only moving more and more quickly. fraud risk is only becoming more and more great, unfortunately. And so the more we can automate and put controls in place, the more we can allow our employees and folks in our finance and accounting fields, to really, to really take an active strategic role and automate processes that can be automated, the better off the better off they are, and the better off for the bottom line. So banks are here to help in that regard. No, no question.
Sara- 19:50
So some questions we want to leave you with to kind of ask yourselves to ask her organizations internally are how can your bank partner help you What trends are we witnessing within our organization? And what questions can we answer today from you? But also what questions can you answer from your internal employees? Are you asking them? Are you listening to them? So I think those are really three things to continue to have those conversations about. Well, with that, I think we’ll leave you. I think there’s maybe one more session before lunch. So thank you for having us today. And we hope you have a great remainder of the conference.
