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• Florida Government Finance Officers Association
• 2007 School of Governmental Finance
• The Basics of Banking Technology
• November 13, 2007
• 800-940am
• Presenters Linda Mason, SVP, Government
  Banking
• Sean Silverbush, VP, Government
  Treasury Management
• Cheryl Zachary, VP, Client Consultant,
  Global Treasury
• Evan Tullos, SVP, Senior Card Account
  Program Manager

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Presenter Biographies

• Linda Mason is a Senior Client Manager at Bank of
  America and is the primary management contact for
  all governmental entities located in the East and
  South Florida markets. Linda, a 20 year veteran
  of Bank of America, has extensive credit,
  treasury management, corporate and retail banking
  experience. She holds Bachelor of Science
  degrees in both Finance and Economics and serves
  on various Boards including Take Stock in
  Children of PBC, Communities in Schools of PBC,
  and the Redevelopment Advisory Board for the City
  of North Miami Beach. Linda is located in West
  Palm Beach, Florida.
• Sean Silverbush has over 15 years experience in
  Cash Management. Previous to Bank of America, he
  spent 10 years with a large school board in south
  Florida. As a dedicated member of Bank of
  Americas Government Treasury Management Team, he
  supports all governmental entities in Southeast
  and Southwest Florida and is responsible for
  designing and delivering their treasury
  solutions. Sean holds an Accounting Degree and
  is located in West Palm Beach. Florida.
• Cheryl Zachary has 34 years of Treasury
  Management experience with Bank of America,
  including 10 years working specifically with
  state and local governments. Her current
  responsibilities include product consulting and
  client education. She holds a Bachelor of Arts
  degree in Psychology and is a Certified Cash
  Manager. Cheryl is located in Atlanta, GA.
• Evan Tullos manages the purchasing card program
  for State of Florida government, institutional
  and healthcare clients. The card programs
  include the Commercial Visa and MasterCard
  branded solutions, Corporate Purchasing Card
  Travel Card, Commercial Pre-Paid Card, and
  ePayables. Evans hold a Bachelor of Science
  degree in Economics. He joined Bank of America
  in 1991 and is located in Ft. Myers, Florida.

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Agenda

• Treasury Management Basics
• Migrating From Paper to Electronic- Why Should
  You Care?
• Card Technology Evolution of Card for Paper
  Payments

4
Treasury Management

• Technology
• Government Interest Checking Accounts
• Zero Balance Accounts
• Fraud Prevention
• Online Services
• Merchant Services

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Technology

• Banks are constantly monitoring industry trends
  and technological advancements to ensure that
  their products and solutions continue to meet the
  needs of clients in a rapidly changing
  marketplace.
• Listen to the voice of the customer.
• Conduct client surveys and collect feedback from
  our internal partners to prioritize our product
  development activities. Additionally,
  bench-marking studies are performed throughout
  the year to compare other service providers.
• The main goal is to continue to meet the changing
  needs of clients while maintaining high quality
  in service delivery.
• Continued deployment and updating of online
  services

6
Government Interest Checking

• Government clients are seeing a change from sweep
  accounts to interest bearing accounts.
• Interest bearing accounts are usually tied to
  Federal Funds and offer a competitive interest
  rate with out the need to invest money overnight.
• There are no restrictions on the frequency or
  types of withdrawals the client may make from the
  account and there is no monthly sweep fee.
• Interest is accrued daily based on the collected
  balance and a 365-day year. Interest is
  compounded on each individual interest-bearing
  account and is credited on the last business day
  of the month.

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Zero Balance Account Structure (ZBA)
Master Account
Accounts Payable ZBA
Payroll ZBA
Acct 1 ZBA
Acct 2 ZBA

• Full Reconciliation
• Positive Pay
• Payee Positive Pay
• Wires/Stop Payments
• Image Access

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Fraud Prevention

• Fraud is a concern for both financial
  institutions and government clients.
• Positive Pay- provides the client with electronic
  access to obtain information about suspicious
  checks clearing against accounts, to view digital
  images of these items and to notify the bank
  immediately of your decision to pay or return the
  check
• Payee Positive Pay- provides an additional level
  of security by examining the payee name and
  comparing it a clients issue information to
  determine if the payee has been altered.
• ACH Blocks- blocks all debits and/or credits from
  posting to your account.
• ACH Filters- accepts only ACH items from trading
  partners that you have authorized. Transactions
  are screened or filtered according to certain
  parameters.

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Online Services

• Banking online allows the client to gather
  information and initiate transactions using the
  Internet.
• Item Inquiry/Image Access allows the client to
  view digitized images of all paid checks online
  using a simple point and click to bring the image
  into view.
• Account Reconciliation allows the client to
  quickly access the status of items, add checks to
  the issue file as they are written and integrate
  issue information with paid check information to
  see the status of a check at any time.
• Stop Payment allows you to place cancel and
  inquire against stop payment on checks. Stop
  payments may be placed for 6, 12 (default), 18,
  24 or 36 months. Confirmation will help you
  easily determine whether a stop payment request
  has been accepted.
• Payment Initiation initiates U.S. dollar domestic
  and international wires electronically with
  confirmations or wires sent to you through online
  banking services.
• ACH allows the client to use the Internet to
  deliver a full array of ACH payments to the bank.
  The client can make direct deposit of payroll,
  pre-authorized debits, vendor payments, Federal
  and state tax payments and internal.

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Online Services

• Reporting and transaction searching is fast and
  efficient.
• Allows the client to gather information and
  initiate transactions using the Internet.
• View previous day detailed and summary
  information.
• Obtain current day information to monitor your
  cash position .
• Access historical information up to five days (or
  up to 25 business days with special options).
• Create customized reports containing specific
  balances and transactions.
• Access account statements and reports online.
• Demand Deposit, Account Reconciliation, Account
  Analysis, ACH Returns, etc.
• Receive statements and reports via secure e-mail
  delivery as soon as they are available.
• Search detailed information for specific
  transactions.
• Transfer balances between your accounts.

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Merchant Services

• Credit Card acceptance among Government clients
  is on the rise.
• Online acceptance of credit cards.
• In-person acceptance of credit card payments
• Kiosk payments
• Automatic credit card payments
• Customers more likely to buy when they have
  multiple payment options
• Customers likely to spend more using a credit or
  debit card than check or cash
• Receive real-time payment authorization, so less
  time is spent on collections
• Increased collection float time
• Reduce the time-intensive effort associated with
  paper checks and cash
• Track transactions online to obtain
  up-to-the-minute account information on credit
  card purchases
• Adaptive risk profiling technology for
  additional security

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Migrating From Paper to Electronic Why Should
you Care?

• In a Nutshell
• It costs you money to stay in a paper environment
• All around us the environment is changing
• You have to change too

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Payments Transformation

• What is happening to checks you write?
• Not your mothers check clearing system!

Images of images oh my!
IRD and Image Exchange
Check Truncation
Lockbox
Paper Methods
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Transforming the Treasury

• Transforming payments landscape has significant
  implications for
• Consumers
• Businesses and Organizations including
  Governments
• Banks

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Electronic Payments Outpace Checks

• Non-cash payments will grow to 110 billion
  transactions per year by 2010
• Check volumes will be less than 25 of total
  transactions

Sources NACHA, Global Concepts, Nilson, Federal
Reserve, Tower, FDC, McKinsey
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Electronic Payments continue to rise.

• Chicago, Illinois, April 16, 2007 - Nearly 16
  billion automated clearing house (ACH) payments
  were made in 2006, a 14.5 percent increase over
  2005, according to statistics compiled by NACHA
• The Electronic Payments Association, PAYMENTS
  2007 conference

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Routing Transit Numbers Receiving Image Files
Highlights 5,992 routing transit numbers
represent about 5,500 institutions.  This means
that approximately 33 of all U. S. institutions
are receiving check images.
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Transforming the Treasury landscape One size
does not fit all

• Treasury
• Receipts
• Accounts Payable
• Payroll
• Purchasing and Procurement
• Liquidity and Cash Position of your Organization

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Making Receivables Electronic
January 4th, 2005
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Accounts Receivable landscape

• Role
• Manage payments/ apply monies received against
  outstanding invoices
• Handle exception processing and deduction
  management
• Develop end customer relationships
• Tools
• Proprietary, ERP and desktop systems
• Workflow management applications including
  document imaging applications
• Stand-alone remote capture technologies
• General types of payments supported
• Checks majority of clients, but use is
  declining
• ACH growing very rapidly
• Wires only on an exception basis to key
  suppliers
• Card gaining more acceptance

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Receivables transformation challenges

• Critical to quality objectives CTQs
• "Do more with less
• Leverage financial investment in ERP system
• Take advantage of state-of-the-art technology
• Migrate from paper to electronic
• Implement scalable and flexible solutions
• Establish shared service centers
• Challenges
• Difficult and time-consuming to determine
  electronic readiness of thousands of vendors
• Some suppliers are hesitant to make electronic
  payments
• Some management may still be attached to check
  float

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Receivables transformation

• Evaluate Challenges
• How your mix of end customers pay you and which
  payment/client types cause you most pain?
• What are slow downs or bottlenecks?
• Which current processes pose an audit risk?
• Suggested Solutions
• Lockbox the old, the new, and the emerging
• Remote Capture Services
• Image Cash Letter
• Web-Based Solutions
• Introducing BOC
• Merchant

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Check Receipts What are you doing today

• Checks mailed in to various locations or
  corporate
• Pass-through mailing to Lockbox?
• Banking Center Deposits?
• Manual updates to internal systems
• Photocopies
• One Possible Solution Remote Capture Services

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How a Remote Capture Service works
1. Scan
2. Amount
3. Transmit
ARC
IRD
5. Clear
Image Exchange
Receiving Bank
4. Review
Payor Bank
Image Partner
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Too many check receipts What are you doing today

• Larger volume deposits, generally produced by
  in-house or third party lockbox providers
• One or two deposits per day based on equipment
  capabilities
• Courier runs to check processing centers
• One Possible Solution Image Cash Letter

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How Image Cash Letter service works
Client
1 - Using their own high-speed remittance
equipment, clients capture check images and
create an image cash letter file.
Image Cash Letter System
Posting Distribution
3 - We validate file format and item details.
5- Post deposits and adjustments.
2 - The client then transmits an image cash
letter file to Bank for deposit processing.
6 - Items are cleared as substitute checks (IRDs)
or images.
4 - Transmit acknowledgment files file and
detail level. Clients monitor receipt of the
acknowledgments.
X9.37
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Web and phone payments What to look for

• Payments via Web, phone or customer service
  representative
• Payment options ACH or Credit Card
• B2B and C2B payments
• Configured to work with Company-specific
  websites look, feel and functionality
• Comprehensive reporting for customer service and
  A/R application

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Merchant Supplier Benefits of Purchasing Card
Accept

• Enhancing customer service
• Meet end customer payment vehicle needs
• Improves Cash Flow
• Payment in 24-72 hours vs. traditional 30 to 60
  days or longer
• Reduces / Eliminates Paper Process
• Documentation on PC / System
• Reduces / Eliminates Collection Costs
• Bad debt collection becomes issuers
  responsibility
• Extend Your Customer Base / Become a Preferred
  Supplier
• Customers making buying decisions based upon card
  acceptance
• Automates Reconciliation Process
• Easier process to review transactions / receipts

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Making Payables Electronic
January 4th, 2005
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Accounts Payable landscape

• Role
• Manage workflow to approve invoices, may be part
  of three-way match against purchase orders and
  receiving documents
• Determine supplier payments and execute payment
  terms, set by Accounts Payable or Purchasing
• Pay employees for travel and expense
  reimbursements
• Tools
• ERP and G/L systems
• Workflow management applications, including
  document imaging applications
• General types of payments supported
• Checks Majority of clients, but use is
  declining
• ACH Growing very rapidly
• Wires Only on an exception basis to key
  suppliers
• FX For lower USD equivalent supplier payments
• Card Evolving deeper into traditional Accounts
  Payable

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Accounts Payable Payments transformation
challenges

• Critical to quality objectives CTQs
• "Do more with less
• Leverage financial investment in ERP system
• Take advantage of state-of-the-art technology
• Migrate from paper to electronic payments
• Implement scalable and flexible solutions
• Establish shared service centers
• Challenges
• Difficult and time-consuming to determine
  electronic readiness of thousands of suppliers
• Some suppliers are hesitant to accept electronic
  payments
• Management may be attached to check float

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Payroll landscape

• Role
• Guarantee payment for all employees
• Determine obligations and pay taxes to government
  entities where company does business
• Tools
• ERP systems
• Payroll outsourcers to manage employee payments
  and/or tax obligations
• General types of payments supported
• Checks
• ACH
• Payroll cards

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Payroll Payments transformation challenges

• Critical to quality objectives CTQs
• Migrate from paper to electronic payments
• Establish direct deposit or achieve greater
  participation
• Reduce check fraud
• Create business continuity plans for disasters,
  e.g., 9/11, Katrina
• Challenges
• Difficulty in increasing direct deposit
  participation
• Limited resource to manage direct deposit program
• Unbanked represent 10 to 12 percent of total
  employees
• Continued increase in check fraud activity
• Employees taking time from job to cash checks
• Unions or contractual arrangements may dictate
  payroll types

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Purchasing/Procurement landscape

• Role
• Manage supply chain
• Negotiate supplier payment terms
• Manage and report on minority supplier programs
• Manage spend compliance
• Tools
• Purchasing systems
• ERP platforms
• External data
• General types of payments supported
• Traditional Checks, ACH, EDI and card
• Travel and entertainment reimbursement programs
• Purchasing card

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Purchasing/Procurement Payments transformation
challenges

• Critical to quality objectives CTQs
• Manage strategic supplier relationships
• Achieve better payment terms
• Improve and measure efficiency
• Challenges
• Creating Win/Win with supplier
• Cost/value proposition
• Data integration
• Enforcing policy compliance

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Payments transformation solutions

• Evaluate
• Is your ERP system able to support multiple
  payment types?
• How much active control do you want to retain?
• Do you have dual controls in your ERP system?
• Would you be willing to let your bank do the
  heavy lifting to move your company quickly
  towards electronic payments?
• Solutions
• ACH payments
• M2M integrated payables
• Traditional card (Purchasing, TE, Prepaid)
• Cardless payments
• Electronic networks or bank managed conversion
  tools

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ACH Payments Benefits

• Reduces cost
• Improves cash forecasting
• Enhances strategic supplier relationships
• Provides greater security over payments
• Overcoming the obstacles
• Afraid of losing check float Negotiate float
  neutral payments terms
• Strategic trading partners may require CTX
  transactions
• Your company may not be EDI capable or may have
  limited IT resource
• One possible solution M2M

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Leverage M2M networks

• Integrated payables Consolidates all payment
  instructions from ERP into single, integrated
  electronic file
• Supports seamless migration from paper to
  electronic payments for global payment types
• Provides STP Eliminates manual intervention
• Supports flexible file formats Your company
  need not be EDI compliant
• Presents split remittance formats that separate
  the financial and remittance data processing
  streams

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The next generation of payments transformation
Internet advice Web remittance

• Furnishes Web-based alternative to paper
  remittance delivery
• Provides an end-to-end electronic solution
• Presents remittance information to less
  sophisticated trading partners
• Trading partners may export remittance data

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Bank/Vendor Managed Payment Portal

• A fully integrated end-to-end electronic network
  payment option
• Eliminates or reduces administrative and IT
  effort required to start an e-payments program.
• Look for
• Flexible file formats
• Vendor enrollment outreach

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Go Cardless
The next generation of payments transformation

• Why take card to the next level?
• Card provides
• No bank transaction fees
• Cash payout incentive
• Improved working capital management
• Improves supplier relationships through a faster,
  more reliable payment option
• Reduces suppliers DSO
• Can be used independently of or in conjunction
  with your current purchasing card program
• Cardless card payments are seamlessly
  integrated into your Accounts Payable process

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Next Generation Services Work Together
The next generation of payments transformation
Cardless Pmts
Supplier

• system generates e-mail notification to supplier
• Updates transaction status and posts to AP system
• Card controls and maintenance

• Receives e-mail
• Initiates payment through ERP or merchant
  terminal
• Keys in remittance data from e-mail

Bank
Card payments
AP System
Payment file
Supplier
ACH

• Can view transactions on line
• Receives flexible data file outputs for updating
  AR

• Forwards ACH payments to the ACH Network

ACH payments

• Process pay run for payments and send a single
  payments file to Bank
• Reconcile paper check, ACH, Wire and other
  payment types

• Splits payments
• Card file
• ACH file
• Check file
• Posts payments to online reports

Check Printing Facility
Check payments
ACH transmission support, online access,
Reconciliation files
Sends payment data to Bank AP system for
inclusion in issue file
Processes and mails checks
Global payments, Wires, Bulk FX, Split
Remittance options
Internal Bank Network
Global Network for Wires, Bulk FX, Split
Remittance options for vendors
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Cash Positioning and Liquidity Control
January 4th, 2005
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Cash Positioning Challenges

• Critical Objectives
• Automated, early and reliable cash position and
  forecast
• Automated access to bank account data
• Automated interface with general ledger
• Challenges
• Real time consolidated cash position
• Efficient and reliable cash forecasting
• Cash positioning process automation
• Investment returns maximization/debt repayment
  costs minimization
• Effective oversight, security and control
• Limited access to IT resources
• Cost of externally produced software

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Cash Positioning Solutions

• Evaluate
• How to access and aggregate data
• Exposure to accuracy of information
• Manual processes for increased productivity and
  efficiencies
• Opportunities to increase core cash or accelerate
  debt reduction
• Solutions
• Simple spreadsheets
• Treasury Workstations/Systems
• Bank provided systems/software
• Full blown ERP Treasury modules

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The Payments Transformation Continuum

• Where is your company?
• What are your strategic goals?
• Where are your customers and suppliers?
• Find a partner to help you meet your business
  goals.

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Card Technology Evolution of Card for
Paper Payments
Evan Tullos
January 4th, 2005
January 4th, 2005
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The Payments Market

• Volume
• Payments increasing / check volume decreasing
• Check volume ever decreasing
• Insurgence of Card as electronic payment
• Cost Reduction
• Corporate focus on reducing transaction costs
• Check vs. electronic payment
• Control
• Information enhancement
• Fraud / risk reduction

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The Payments Market

• About 1 of business-to-business payments are
  made by commercial card
• 50B purchasing card, 150B other cards (TE,
  Fleet, Small Business)
• Card payments growing over 25 per year
• This is a vast untapped market, especially in the
  area of A/P disbursements, which are
  traditionally the domain of checks

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Extending Purchasing Card Reach

• Traditional card programs
• Solves the problem of point-of-purchase payment
  (retail, phone, internet, pre-pay)
• Limited by need for internal controls data
  visibility
• Accounts Payable disbursement
• Solves the problem of payment type optimization
• Check ACH both have negatives for buyer and
  supplier
• But to replace them, must have comparable payment
  timing/amount control system integration

January 4th, 2005
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Using Card Payments for AP

• Direct Financial Benefit
• Provides alternative to traditional fee-based
  payment types
• Extends float increasing cash flow
• Provides cash payout incentive paid when annual
  spend targets achieved
• Payment Control Benefit
• Improves transaction risk management
• Decreases fraud
• Supplier Relationship Benefit
• Reduces suppliers Days Sales Outstanding
• Reduces suppliers processing costs

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January 4th, 2005Benefits to the Supplier

• Relationship Benefit
• Competitors may accept purchasing cards
• Control Benefit
• Avoid giving out bank information for ACH
  payments
• Cost Benefit
• No per-piece check processing cost
• Time Benefit
• Funds made available on card at time of email
• More efficient process with no phone calls
• Float Benefit
• 5-20 day faster receipt of funds to improve A/R

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Supplier Testimonials
The .. payment process is easy for us to use,
more accurate, and more efficient than processing
checks.   Accounts Receivable Manager EMC
Corporation We accept credit cards as the
primary payment method from a number of our
clients, and have been asked to follow a variety
of approaches to process payment by card, but
(this) solution is by far the most intuitive and
straight-forward process that we have seen ..
thus far.   Accounts Receivable Manager R.R.
Donnelly  
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Overview of Monster Worldwide

• Parent company of Monster, the leading global
  online careers property that's changing the way
  people look for jobs and the way employers look
  for people
• Also own TMP Worldwide Advertising
  Communications, one of the world's largest
  Recruitment Advertising agency networks
• We have approximately 4,600 employees in 25
  countries with almost 1 Billion in 2005 sales

January 4th, 2005
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Monster Worldwide Success Overview

• Spend Opportunity
• 450M AP Annual Spend
• 315M Potential Credit Card Spend
• 40 conversion rate
• Business Impact
• Over 10M of increased cash flow to the business
  for 2006
• Additional revenue generated through BPS

Predicted Annual Spend
January 4th, 2005
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Monster Worldwide Success Overview

• Implementation Best Practices
• Rapid enrollment in 15 groups of 50 suppliers
  each, accelerating end-to-end process
• All Credit Cards consolidated (TE, AP,
  ePayables)
• Dedicated resource for vendor contacting and
  program implementation (Administrator)
• Formulate a single clear and obtainable goal for
  department
• Create incentive program for AP clerks
• Flag all check requests 50k for potential
  conversion to card
• Integrate process with new vendor contracts
  through Procurement and Marketing channels

Monster Team
? ? ? ? ?
AP Clerk
Marketing
BUA
Department Head
Procurement
Typical Team
January 4th, 2005
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Monster Worldwide Success Overview

• Results Overview
• Over 300 vendors on program
• Run rate of 88 million in annual spend
• AP team is exceeding Q1 expectations by 25

January 4th, 2005
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Bottom Line Benefits of Using Card in AP

• Process efficiencies
• Increased rebate potential
• Reduced check costs
• Cash flow optimization
• Faster vendor payment without cash flow impact
• Extend float by leveraging p-card payment terms

January 4th, 2005
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The Wrap Up

• Rapid changing solutions
• Current environment more complex than expected
• More opportunities than ever!
• Dont do it all immediately prioritize
  solutions that
• You can quickly implement
• Improve core process
• Easily adopted both internally and with customers
• Plenty of help is available

60
This presentation is for informational purposes
only. It does not constitute an offer or
commitment to buy or sell or a solicitation of an
offer to buy or sell a security or any financial
instrument, or a commitment to enter into a
transaction, of the type generally described
herein. The information contained herein, and any
other communications or information provided by
Bank of America, is not intended to be, and shall
not be regarded or construed as, a recommendation
for transactions or tax or investment advice, and
Bank of America shall not be relied upon for the
same without a specific, written agreement
between us. This information is not legal advice.
You may wish to consult your own business and
legal advisor to discuss your companys business
and legal needs. Information contained in this
presentation has been obtained from sources
believed to be reliable, but its accuracy or
completeness is not guaranteed by Bank of
America. Also, certain information contained in
this presentation speaks as of the date of this
presentation (or another date, if so noted) and
is subject to change without notice. This
presentation is intended solely for your use and
under no circumstances may a copy of this
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