Next Generation Receivables Process Management

1. Welcome Next Generation Receivables Process Management

2. Agenda • About Open Scan • Business Challenges • The A/R Opportunity • Integrated Workflow • Models for Automation • Lockbox • Distributed • Distributed Capture Models • Electronic Payments • Deductions • Automatic • Manual • Questions

3. Company Background Founded in 1998 - based in Denver, Colorado Software Development Company • Enterprise solutions • Wholesale environment • Accounts Receivable focus • Accounts Payable/ECM solution Initial Clients were/are State Child Support Organizations • Installations in 26 states Current Focus has been Corporate Clients • More than 50 commercial clients including 20+ in the Fortune 500 The leader in financial workflow automation including A/R & A/P with proven success in the market for more than a decade. “ ”

4. Business Challenges • Processing payments is more complex • Payment types are diversifying • B2B paper checks are not going away • Decoupled remittances are growing • Unauthorized deductions are growing

5. The A/R Opportunity World-Class Organizations are More Efficient in Processing Customer Remittance Transactions Average Time to Apply Cash (Business Days From Receipt of Customer Remittance Through Successfully Completing the Cash Application to Individual Accounts) Source: Hackett 2010 Finance Functional BM Peer Group World Class

6. The A/R Opportunity Standardized Processes and Automation Increases World-Class Productivity and Lowers Unit Costs in Cash Application Customer Remittances per FTE Process Cost* per Customer Remittance *Process Cost = Labor costs + Outsourcing Costs Source: Hackett 2010 Finance Functional BM

7. The A/R Opportunity Traditional ways to Process Receivables: • Lockbox Processing • In-House Processing • Electronic Payments New Technologies allow Corporations to: • Maximize Posting Accuracy • Decrease Resource Requirements • Eliminate Data Entry Costs • Optimize Exception and Deduction Handling

8. $ Traditional Process Current Bank Lockbox Options Mail Arrives at Bank Bank Corporate Lockbox 100k invoice line items X 20 characters per line X $0.01 per keystroke Remit and Check Data Transmitted to Corporate Exceptions Handling $20,000 per month $$$ Mail Opened and Contents Scanned Remit and Check Images Transmitted to Web Direct Keying from Image Checks Deposited A/R System

9. $ Traditional Process Current In-House or Distributed Workflow • Bad News: • Manual cash application • Control tape &re-association • Risk/Compliance • Data quality issues Mail Arrives at Corporate or Field Location Mail opened and sorted into batches Invoices are manually processed into A/R system A/R System Checks are physically delivered or scanned and transmitted to bank Checks are copied Deposit is prepared Bank

10. $ Lockbox Process Automated Lockbox Workflow Corporate Bank Lockbox • Electronic Remittance: • Emails • Pdf • Excel Mail Arrives at Bank • ACH & CTX /CCD+ • ACH • Wires Invoice # Amount Date PO # Customer # etc. Remit and Check Images Transmitted to Corporate AUTO EXTRACT Mail Opened and Contents Scanned A/R MATCHING DEDUCTION ID POSTING FILE Checks Deposited A/R System

11. $ In-House Process Automated In-House Model Corporate Mail Arrives at Corporate Mail Opened and Contents Scanned Invoice Amount Date PO Customer # etc. AUTO EXTRACT A/R MATCHING DEDUCTION ID POSTING FILE Electronic Deposit Bank ICL CREATION Cash Application A/R System

12. $ $ $ $ $ Distributed Process Hybrid (all Locations) Checks arrive, contents scanned & cash deposited Corporate Bank Data extracted from all images & matched, cash applied, ICL prepared by Open Scan Images of Checks/Remits Transmitted from Lockbox Check21 Electronic Deposit Check and Remit Images Sent to Open Scan Server Remote Sites

13. $ Electronics Processing Workflow Client Corporate Your Bank Sends you: NACHA file,EDI 820,EDI 820 CTX,or EDI 820 CCD+ Your Client Initiates an Electronic Payment (ACH) from their Account Account # Amount Invoice PO Customer # Their Bank Transfers Fundswith a NACHA Compliant Data Feed DATA IMPORTER Invoice # Amount Date PO # Customer # Etc. IMAGE CREATION A/R MATCHING DEDUCTION ID POSTING FILE Depository Bank Client Bank Cash Application A/R System

14. Electronics Processing Search and examine remit(s) 1 2 Examine a payment This is an image of the remit

15. Electronics Processing 4 Submit 3 Drag and drop. The remit is moved into the payment.

16. Invoice123752 -$29 Deduction Identification Automatic Deduction Identification Invoice With Deduction DI Auto Tax Exempt Code Freight Code Small Dollar Code Net 10 Term Code Tax Frt Sd Net 10 (5%) 123752 42 68 < 20 29 1237 • Expected $580 • Paid $551 • Codes are Based on Client’s Business Rules • Rules are Cross Referenced in Priority Order Based on Clients Preference. Invoice Received in Under 10 Days = 5% discount or $29 Automatically Assigned Code – Ready for Processing

17. Invoice234644 -$84 DeductionIdentification Manual Deduction Identification Invoice With Deduction DI Auto Tax Exempt Code Freight Code Small Dollar Code Net 20 Term Code Tax Frt Sd Net 20 234644 $82 $104 < $20 $55 Broken crate - $84 Invoice Enters DI Manual and a User Selects the Appropriate Code(s) Through a Simple Pull-Down Menu.

18. Major Benefits of Automation • Reduction of Data Entry Costs • One-time expense • True automation, not outsourcing • Integrated Payment Workflow • Corporate Payments of all types • Remote Deposit Capture • Electronic payments • Improved Data Speed and Accuracy • Proven algorithms • Validation prior to posting • Same day processing • Better Customer Service • Customers can still remit to the same local site as always • Maximizes effectiveness of collections • Timely accurate posting reduces unnecessary credit holds

19. Clients

20. If you would like to learn more or have additional questions, visit www.openscan.com, e-mail bbonjean@openscan.comor call 303.867.7419 Questions Thank You For Attending