Bank of America Debuts Beefed-up Trade Payables Discounting Program

Global Treasury Services target high-volume buyers, aim to reduce working capital requirements

Global Treasury Services target high-volume buyers, aim to reduce working capital requirements

San Francisco, CA — February 23, 2006 — Bank of America Global Treasury Services (GTS) has rolled out beefed-up supply chain finance technology and supplier outreach services, further enhancing its Trade Payables Discounting Program.

The Trade Payables Discounting Program is intended to help Bank of America clients reduce working capital requirements and finance costs throughout their supply chains, with the goals of strengthening operating margins, improving cash conversion cycles and developing stronger supplier relationships.

"Bank of America's ... technology and enhanced functionality provide all supply chain participants with greater visibility into the cash flows associated with trade payables, which in turn drives reductions in working capital requirements as well as finance and operational costs," said Dan Scanlan, senior vice president and global product manager for trade at Bank of America.

Through the automated trade payables program, buyers can:

  • Automatically upload invoice data into a secure, Web-based platform.

  • Provide suppliers with Web-based visibility into the cash flow associated with trade payables.

  • Collaborate online with suppliers on credit memos and other invoice offsets.

  • Enable suppliers to obtain "on-demand" financing at their discretion at the invoice level by requesting that Bank of America discount their accounts receivable due from the buyer.

  • Settle all trade payables electronically.
Tapping Web-based Platform

Bank of America offers a payables presentment, discounting and financial settlement service via a hosted technology solution delivered in connection with PrimeRevenue.

Clients provide Bank of America with an electronic output from their accounts payable system with approved payables data, such as payable date and amount. This information is uploaded to a hosted Web-based platform. At anytime, suppliers can log onto the Web-based front-end system and view the amount and exact payment date of approved receivables.

Clients and their suppliers can collaborate to determine the final invoice amount through the posting of credit memos. The supplier finance component then allows suppliers to sell these receivables to Bank of America in order to accelerate cash flow.

Varied Discount Rates

Client suppliers may choose to receive cash for any or all of these receivables at any point up until the invoice maturity date. Suppliers receive 100 percent of the value of the receivable less discount charges. The system allows for different discount rates for different suppliers.

A supplier may choose to discount individual receivables rather than an arbitrary bundle or simply wait to receive full payment electronically at the end of the receivable term. A supplier only pays a fee, the discount charge, if it chooses to discount the receivable prior to maturity.

At the end of the normal payment term, clients remit payment to a clearing account held at Bank of America. The system then issues electronic funds transfer instructions, which distribute payments to each supplier or to Bank of America, if the supplier discounted the invoice.

End-to-end Payables Reconciliation

This process eliminates check-processing, wire and ACH charges normally associated with supplier payments. Payment cycles are reduced to as little as 48 hours from current terms. The solution leverages existing systems and processes, with minimal changes to clients' current business processes.

"Trade Payables Discounting is one component of our full suite of financial supply chain services," said Scanlan. "This solution can also be combined with our Purchase Order-to-Pay Service, an end-to-end payables reconciliation solution for open account and letter of credit transactions, allowing you to further reduce the administrative effort associated with payables management."

The Global Treasury Services division of Bank of America provides integrated working capital management and treasury solutions to clients that include multinationals, correspondent banks, governments and Global 1000 businesses. GTS services include treasury management, trade finance, foreign exchange, short-term credit facilities and global liquidity management.

PrimeRevenue is a supply chain financial services company that provides automated supplier finance, payables presentment and financial settlement services to Global 2000 organizations and their suppliers.

Additional Articles of Interest

— For more information on the current state of the payment solutions market, see the article "The Analyst Corner: Payment" in the December 2004/January 2005 issue of Supply & Demand Chain Executive.

— Electronic invoice presentment and payment failed to meet its initial predictions. However, recent studies have uncovered a renaissance of interest in Web Invoicing & Electronic Payments solutions as organizations shift their emphasis toward cost containment and productivity enhancement. Read more in "The Analyst Corner: Payment," in the October/November 2005 issue of Supply and Demand Chain Executive.