Enterprising Payments Why Payment Hubs Make Sense · Mark K. Webster, CPA, CCM Partner Treasury Alliance Group, LLC Enterprising Payments Why Payment Hubs Make Sense Jim Furry, CTP

Mark K. Webster, CPA, CCMPartner

Treasury Alliance Group, LLC

Enterprising PaymentsWhy Payment Hubs Make Sense

Jim Furry, CTPDir-Treasury Operations

PPL

©2007 – Treasury Alliance Group LLC – All Rights Reserved Page 1

Agenda

• Introduction

• Payment Hubs

• PPL Case Study

• Q&A

Introduction


Once upon a time, payments were easy…

There was only one!


But we keep inventing new ones!

King Croesus of Lydia invents the coin

ca.. B.C.550

1800

ChecksTravelers Checks

1950

Credit Cards

ATMs

1970 1990 2000

Voice Response

Dumb Chip Cards

Shared ATMs

Global ATM Network

Popular InternetCheap Chipcards

Client/Server

Smart Chip CardsTelephone Bill Payment

PC Banking

Debit Cards

PayPalMobile


Paper

ElectronicCard

?

Transactions intended for one payment method are converted to another…

Convergence complicates life

with increased risk and reporting problems!


We struggle to adapt

Creating siloed systems with repetitive infrastructure!

Application Silos

Corporate

Consumer

Wholesale

High Value

Exceptions

Administrative Support

AC

H

Platform Silos

Pa

pe

r Ch

ec

k

Wire

Tra

ns

fer

Cre

dit C

ard

Deb

it Card

Ima

ge

Ch

ec

k


Spaghetti anyone?E

FT

!

ED

I

Mail

Tra

nsfe

r

CLS

Tax

EF

T

Lig

ht

PE

P

Check

Wire

Tra

nsfe

rs

Dra

fts

PO

S

CP

CS

Bill

Paym

ent

Cla

ims &

Reim

b

PP

DD

S

PP

DA

P

Cle

aring

Serv

ices

Positiv

e

Pay

Auto

Pay

FX

Pro

Money

Ord

ers

POS CARDS TRUST Ret. Corp. WS

EDI PC

EDI MVS

EDI Mail

CHAPS

EFT Light

TFC

FRB

CHIPS

BRAD

EDDA

EPM

FRBWT

PPDAP/PPDDS

Automated Accts Payable

Image Proof & Clearing

MICR Document Control

Payments Processing

PPD/PAP

EDI Wires Paper ClearingsACH

Payment Hubs


Enterprise Payment Hub

Data Management

Shared Services Manager

Payments Customers Rules

Balancing

&

Recon

Returns &

Repair

Reporting

&

Analytics

Security

& Risk

Mgmt

Payments Hub

Least Cost

RoutingTranslation Messaging

Release

Mgmt

Customer

Portal

Internet

Wire Room

Front Office

Back Office

ATM/POS

ChannelsPaymentsCheck

Fed

Image

ACH

SWIFT

PayPal

CLS

Target

STEP1

STEP2

VISA

MC

FedWire

Chips

ATM

Future


Why Payment Hubs

• Reduced cost

• Faster response time/Real time monitoring

• Open standards

• Fewer exceptions/Improved STP

• Improved compliance

• Network agnostic

• Available technology

• Flexible migration path


Bank 1

Bank 2

Bank 3

Bank n

PaymentsCheck

Fed

Image

ACH

SWIFT

PayPal

CLS

Target

STEP1

STEP2

VISA

MC

FedWire

Chips

ATM

Future

Corporate Payment Hub

PaymentsTrading

PartnersRules

Treasury

Workstation

General

Ledger

A/P

A/R

POS

Payroll

Enterprise Payment Hub

Data Management

Shared Services Manager

Payments Customers Rules

Balancing

&

Recon

Returns &

Repair

Reporting

&

Analytics

Security

& Risk

Mgmt

Payments Hub

Least Cost

RoutingTranslation Messaging

Release

Mgmt

Customer

Portal

Internet

Wire Room

Front Office

Back Office

ATM/POS

Channels


Why Corporate Payment Hubs

• Reduced cost

• Reduced float

• Improved information management

• Real time reporting and analytics

• Improved risk management

• Bank agnostic

• Increased control

PPL Case Study

© 2007

PPL CorporationPage 15

PPL Corporation

PPL Corporation, headquartered in Allentown, Pa., controls more than 11,000 megawatts of generating capacity in the United States, sells energy in key U.S. markets and delivers electricity to more than 5 million customers in Pennsylvania, the United Kingdom and Latin America. PPL is a $6.9 billion corporation that ranked 350 on the Fortune 500® for 2006. PPL's four principal business subsidiaries are PPL Generation, PPL EnergyPlus, PPL Global and PPL Electric Utilities. PPL employs about 12,600 people on three continents.

© 2007


PPL Treasury Organization

VP-Finance & Treasurer

Dir-Treasury

Operations

Assistant

Treasurer

Dir-Investments &

Pensions

Jim Furry, CTP

© 2007


Agenda

PPL Payment Architecture: Early 1990s

PPL Desired Architecture: Mid-1990s

PPL Actual Architecture: Mid-1990s to

Today

PPL Payment Architecture – Future

(2008 and beyond)

PPL Next Steps

© 2007


PPL Payment Architecture:Early 1990s

Accounts

Payable

Payroll

Investor

Services

Wires

Check Records

Check Records

Check Records

ACHs

ACHs

ACHs

Wires

Common

Check

Print

Bank

Bank

Bank

Bank

Bank

FormattedChecks US Mail

© 2007


PPL Payment Architecture:Early 1990s

Problems with this architecture…

– Still largely siloed

– Duplicate functionality

PPL settlement strategy (at that time):

– Implement single disbursement system that receives “requests for payment” from PPL payable sources:

• Accounts Payable

• Payroll

• Investor Services

© 2007


PPL Desired Architecture:Mid-1990s

Accounts

Payable

Payroll

Investor

Services

Payable Records

Payable Records

Payable Records

ACHs

Wires

Common

Disbursement

System

Bank

Bank

Formatted

ChecksUS Mail

© 2007


PPL Actual Architecture:Mid 1990s to Today

Bank

Cash Receipts Details

Material/

Service

Supplier

Activities

Ve

nd

or

Ch

ec

ks

Wir

es

/

AC

HS

Remittance

Processing/

Lockbox

Fuel

Procurement

Fu

el

Ve

nd

or

Ch

ec

ks

Wir

es

/AC

Hs

Other PPL

Front Offices

(Zainet, MCS,

CSS (x2),

ECIS

Employee

Activities

Vendor

Payables

Paycycle

Oth

er

Ch

ec

ks

Wir

es

/AC

Hs

Investor

Activities

Pa

yro

ll C

he

ck

s

AC

Hs

Consolidated Cashflow Database

Receivables /

Payables

Inv

es

tor

Ch

ec

ks

Wir

es

/AC

Hs

Other PPL

Front Offices

U.S. Post Office

Electronic

Remittances

Bank Deposits

Paper Invoices

Ch

ec

k R

em

itta

nc

es

Fuel Vendor

Payables

Other

Payables /

Receivables

Interest /

Dividends,

etc.

Payroll

Electronic Invoices

Receipts /

Disburse-

ments

Legend:

Front Office

Treasury Back

Office

Treasury

Reporting

Common Check Print

© 2007


PPL Payment Architecture:Mid 1990s to Today

Problems with this architecture…

– We didn’t quite get to the complete spirit of the vision for disbursements:

• With the PeopleSoft disbursement system, all transactions have to go through the A/P vouchering process to get to the disbursement system

– So we did not implement payroll into PeopleSoft A/P, …

– And we did not implement investor payments into PeopleSoft A/P

• Controls around disbursement issuance are centralized, but we still do not have a completely automated means to implement controls around disbursements

– Cash receipts are still processed and controlled in a separate system using totally different controls and procedures

© 2007


PPL Payment Architecture:Future

PPL settlement strategy:

– Implement integrated cash settlement system (ICS):

integrated for cash disbursements and cash receipts

– Integrate Enporion’s existing physical supply chain

offerings with the new financial supply chain cash

settlement system (ICS)

– Reap business case benefits of new approach:

• Achieve reduced resources required to support

settlement business functions

• Enable greater staff flexibility resulting from common

processes, technologies and controls across

disbursements and receipts

• Operate with fewer support resources resulting from

fewer technologies supporting settlement

http://www.enporion.com/website/index.jsp

© 2007



Treasury Back Office

Receipts /

Disbursements

Receivables /

Payables

SettledCash

Receipts

Invoices

Invo

ices

Payab

les

Payab

les /

Receiv

ab

les

Payab

les

Ch

ecks

Pap

er

Bil

ls

Wir

es/

AC

Hs

Digital

Mail-

room

Material/

Service

Supplier

Activities

Fuel

Procurement

Other PPL

Front Offices

(Zainet, MCS,

CSS (x2),

ECIS

Employee

Activities

Vendor

Payables

Investor

Activities

Other PPL

Front Offices

Fuel Vendor

Payables

Other

Payables /

Receivables

Interest /

Dividends,

etc.

Payroll

Payab

les

Payab

les

Rem

itta

nce

Deta

ils

BankU.S. Post Office

Electronic

Bills

Including

ARC

Deposits

Legend:

Front Office

Treasury Back

Office

Check Remittances

Paper Invoices

Ele

ctr

on

ic

Receip

ts

Ele

ctr

on

ic

Invo

ices

© 2007



Advantages of this design:– Supports settlement of payables and receivables in same

system

– Provides for an exception based settlement model• Flexible verification rules implemented by business analysts

• Flexible work queues with user-definable escalation parameters

– Enables consistent procedures and controls for disbursements and receipts

– Provides integrated cash information for near-term cash planning

– Provides full management visibility into cash operations:• Operational Work Management:

– Current status of all exception queues

– Ability to dynamically reallocate resources to queues requiring additional assistance, but still maintaining appropriate segregation of duties

• Performance Metrics:

– Measures against process SLA targets (including acceptable defect rate targets)

– Drill-thru capabilities to root cause reasons for results

© 2007


PPL Next Steps

Implement Accounts Payable “OK to Pay” process on Passport A/P system

Implement Digital Mailroom for efficient extract, image and data capture

Implement Microsoft Dynamics GP for PPL’s “miscellaneous commerce”

Work with Enporion to build Integrated Cash System (ICS)

Integrate ICS with Enporion supply chain offerings – completing the integration of the physical and financial supply chains


Questions?


Mark K. Webster, CCM, CPA

Partner

Treasury Alliance Group, LLC

http://www.treasuryalliance.com

[email protected]

(216) 375-4155 (mobile)

(216) 932-1678 (office)

For further information:

Jim Furry, CTP

Dir- Treasury Operations

PPL

http://www.pplweb.com

[email protected]

(610) -774-5237 (office)

http://www.treasuryalliance.com/

mailto:[email protected]

http://www.pplweb.com/

mailto:[email protected]

Documents

Enterprising Payments Why Payment Hubs Make Sense · Mark K. Webster, CPA, CCM Partner Treasury Alliance Group, LLC Enterprising Payments Why Payment Hubs Make Sense Jim Furry, CTP