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Hello, everybody.

My name is Breanna Dunn, and I'd like to welcome everyone to our special edition webinar entitled "A Look at Paymentsin Times of Change," hosted by your partners on the U.S.Bank team.

Before we get started, I'd like to take a moment to share just a few notes about today's format. First, all participants have been placed in listen-only mode to prevent any background noise.

Second, we'll be using audio and PowerPoint to support today's webinar.

And third, we invite each of you to please share your feedback following today's webinar by completing a short survey, which will pop up in your internet browser upon exiting the call.

Before we start today's discussion, I'd like to introduce our speakers starting with Jeff Jones, president of corporate payment and treasury solutions; Rich Erarior, EVP and head of global treasuring management; Nicole Trackett, head of corporate payments, system product and and Mike Jorgenson, head of global treasury management and commercial sales.

We're extremely fortunate to have these individuals leading today's conversation.

And with that, I'll hand the call over to Jeff Jones.

I'd like to start off by thanking all 1,600 of you for joining the webinar today.

I've been with U.S. Bank for more than 35 years. And I never imagined

there'd be a conference call with 1,600 clients on the call once, where the overwhelming

majority of the participants were dialing in from home.

The last several weeks have likely been challenging for all of us as we adapt to the changes needed due to the COVID-19 pandemic.

I think all of us are seeing or feeling impacts and uncertainty personally, in our communities, in our jobs, in and our companies.

And during today's webinar, what the U.S. Bank team really wants to convey is some

information on items that you or your team has may wish to consider as you plan

your responses to COVID-19.

Our goal today is to provide you with helpful information and really things to

think about as you make important adjustments in decisions to maintain your financial operational models and to preserve your financial strength during these uncertain times.

Together today, we'll walk through business continuity planning readiness, opportunities for business payment process efficiency and effectiveness, key areas of risk and steps you can take to mitigate fraud, and then we'll wrap up by sharing where you can access resources we've made available to help you and your business.

So to get started today, let me turn it over to Rich Erario, who leads the global treasury management business at U.S. Bank.

Staying safe and healthy during these unprecedented times that we're going through right now. So as we're navigating through the current COVID-19 environment, I'm assuming that most, if not all of us, are now operating under our respective business continuity plans.

And that said, I'm sure that there are still details that all of you are working through that even the best of continuity plans could not have accounted for under the existing circumstances.

But I think, for the most part, we're all now in a work-from-home mode with only the most critical functions that require office staffing still traveling to and from our company work locations.

So under this new operating environment, we really feel that now's the time that you should be considering a number of critical activities in your go-forward plan.

And a couple of those include, number one, frequent communications and support, which your employees are going to require, and they're going to need during these truly uncertain times.

I think the second thing is having the essential tools available that your team's going to need to maintain a really high level of service to your customers.

And then third, technology capabilities that can be utilized to provide optimal results while we operate in a COVID-19 environment for what we really are uncertain to be in duration.

We just don't have a window into how long this might last. Now the core of your business continuity plan is like all, to ensure the readiness of your entire organization to provide this continued level of service and availability to your customers and employees during challenging times.

And the key here is that we want to avoid any disruption in service in order to be certain that we're maintaining our customers' trust and confidence while, at the same time, we're maintaining really good supply chain and vendor relations.

And I think it's probably fair to say that we've all already experienced that readiness doesn't guarantee or it's not going to automatically result in a successful business continuity environment.

Watching our business continuity plan is a requirement to remain operational, but it's really going to require nurturing and feeding in the form of testing, adapting, and adjusting in order to maintain effective business processes and results.

Now we know that you're all very busy triaging business impacts and addressing very logical questions, such as how do we deposit cash if the branch is closed?

Or, how do we scan checks when employees are working remotely? Or, how can we disperse check payments when no one's in the office?

And we understand that, and we're hoping to provide answers to those questions for all of our clients.

But no matter where you are in your current continuity process, your business continuity process, I think a couple of best practices are really going to help ensure your continued readiness.

For example, you're going to want to assess risks and threats.

So take into consideration your partners and your third-party vendors.

You may be very well prepared, but the question is are they equipped to ensure that there's no disruptions to your business?

You want to review your capital expenditures, and I would say your financial position.

So can you meet your short-term and long-term objectives? You want to ensure your technology infrastructure, the platforms that you operate on, the support resources that you need, and all of the other tools that are necessary to maintain your business processes are in place and performing as expected.

And if not, then that's where the adept and the enhanced function would come into place as we continue to move deeper and deeper into this environment.

I think you're also going to want to build awareness and communicate early.

This has been incredibly important throughout all companies in our country.

And it's especially important during this time of crisis.

There's no more important time that communication needs to be thorough, and it needs to be very frequent.

And regularly sharing with employees at all levels of your organization's going to be key so that they understand the state of the company.

It also needs to include a plan for your customer communication strategy and consider, actually, maybe what we're really doing today is reaching out and dialoguing directly with your customers.

I think you're going to want to conduct validation and the maintenance of your plan.

So you want to do validation testing. You want to assess, and you want to adjust.

And adjustments could maybe come in the form of additional training for your employees or maybe implementing a new banking service that you might not have had before that you need in an environment where everyone is remote.

It also could be based on ensuring that your employees have what they need to be fully operational and productive remotely.

And I would say that maintenance also comes in the form of ensuring that your plan is always current.

And as you're moving through it, you want to document those little changes that you're making in order to institutionalize those improvements that you're making along the way.

And then, finally, at the foundation of any good plant, doesn't need to be a BCP plant, is good reporting.

And I would say during and after this crisis, review the effectiveness of how your response played out and collect all the necessary data that created that effective execution

and the deployment of your BCP plan so that you can enhance it for even this crisis, but more importantly for any that may occur in the future.

So let's move to the next slide and spend a little bit of time on the subject of risk.

So not a surprise, but as we all know in the functions that we're in, new situations create new risks.

And I'm sure that you've recently read articles like I have that, I should say, describe how cyber criminals are capitalizing on the public's desire and their need for information around COVID-19.

But this is also resulting in a surge in business email compromise, also known BEC.

And this is where scam-- these are scams where cyber attackers impersonate internal company staff members.

And most often is the senior executive, like many of you on the phone.

And they're requesting sensitive information or they're even asking for fund movement.

So this means it's more important than ever to understand where some of your key risk and vulnerabilities are and the potential impact that they might create.

Then, you need to figure out what could you do to help mitigate or prevent them.

Now you can see on this slide, there's two categories of risk exposure that I thought we should chat about today-- financial, and operational, and regulatory, and reputational.

On the financial and operational side, this would include putting safeguards in place to limit potential monetary losses and then identifying where there may be limited ability to continue conducting essential business processes and functions.

When we look at regulatory and reputational, this is a kind of a broad category. But it includes looking at your ability to comply with legal or industry regulationsthat you may be subject to plus reputational risks that could impact future relationship with your customers, with your trading partners, even employees or investors for that matter if we don't meet their expectations.

Now risk may have shifted in this environment, but there are mitigation strategies that your business can employ to limit those risks.

So like in business continuity planning, consistent and regular internal and external communications are going to be key, as are working capital and cash management optimization and fraud prevention strategies and tactics that we'll talk a little bit about next.

Now I mentioned earlier that criminals are capitalizing on the public's desire to learn more about COVID-19.

Now more that means now more than ever we're all going to need to be very diligent in our fraud prevention and controls.

So there's three primary areas of focus that I think we can refer to when we're trying to protect our organization against fraud. I would say they're internal procedures and controls, online fraud protection and controls, and payment controls.

Let's talk about internal procedures and controls.

You have to have strong internal procedures and controls that leverage fraud prevention best practices and responsibilities.

Here's a couple of things that come to mind when we talk about the subject.

You want to use strong policies and procedures to make sure that you are safeguarding sensitive information. And all these things become exponentially more important as our staffs are working remotely.

We want to make sure we talk to our teams about their role in preventing fraud losses and make sure that they completed their training, establish a clear division of duties, make sure that we limit access and the span of control.

And an example here would be the separation of, say, accounts payable and accounts receivable functions, as well as maybe limiting financial data access only to those employees that have the appropriate authority.

You may want to even consider conducting surprise audits and verifying out-of-pattern pattern payments from internal employee actions.

Maybe use a second communication channel to validate all payment-related requests, including senior executives and requests from vendors to change payment instructions.

Review signing authority regularly.

This can include bank signature cards and also things like removing executive signatures from your annual report or any other types of documents that you publicly publish in order to prevent illegal scanning in the use of those signatures-- so just a couple of ideas around internal process and control.

Next, on online fraud and protection controls, a couple of things that you might want to be thinking about is make sure that all of your employee workstations

have updated operating systems-- software, antivirus, and malware protection.

Make sure you communicate that personal email and internet use on company-owned computers is not protocol.

Prevent malware infections by limiting application loading, software, and document downloads.

It's probably a good idea to also make sure that pop-ups and advertisements, where possible, are blocked.

Regularly test your employees with fake emails and links to educate them on the importance of reporting and deleting suspicious emails instead of clicking on and opening them.

Don't send sensitive information or confidential information via email.

And if you need to send information, block or truncate account numbers, or use encryption or security software to send sensitive information if necessary.

Dual controls are important, not only for workstations but for online banking applications.

And I would say this includes separating initiation, and approval of payments, and deposits, as well as administration of user access and rights.

Monitor account balance, it's very critical, on a daily basis.

And I would consider activating notification and alert features in your online banking applications.

Those could include a variety of daily activity and fraud alert capability.

If you can, migrate to electronic payments, like virtual cards, and HGH, and real-time payments.

Because there's opportunity to leverage the inherent controls in those types of products.

Checks, use detailed approval procedures that require preauthorization, especially for high dollar value checks.

And ensure all payment details are included in the check request.

Make sure you use fraud prevention services, like Positive Pay.

It's also important to review check controls, check stock controls.

And it starts by selecting a highly qualified and established check vendor.

And also look for options like using different styles of checks for each account to support easy recognition, incorporating security features into the check design.

And then I think it's worth noting that it's the federal government now that's going to be preparing to ready the distribution of U.S. treasury checks in response to COVID-19.

We have to realize that the fraudsters are probably already thinking of ways to add payees or acid-washed checks to new payee name.

So even creating really, very authentic looking counterfeits using color copiers.

So it's really critical to have established payment controls and the right technology in place as the foundation of your fraud mitigation strategy.

And I think it's important to routinely review, adapt and more frequently, especially when we're in the middle of a crisis environment like we are right now.

So hopefully, those were some ideas that get you thinking about the key areas that you might want to lend a little bit more focus to during the crisis such as the one that we're in.

So with that, I'm going to turn this over to Nicole Tackett to discuss and look at some questions around working capital and the associated processes that go with them.


Thanks, Rich.

In this next section, we will share ideas and best practices related to your accounts payable and accounts receivable practices, liquidity management strategies, and any impacts on making and processing international payments to help with your COVID response and beyond.

We'll present these considerations in the form of questions so your organization can identify gaps or opportunities, especially if you now have a distributed and remote workforce.

Thinking through these questions can help you pivot to meet the demands of your employees, trading partners, customers, and your shareholders.

So let's take a look at accounts payable.

For many, the AP process remains manual or paper based with significant time spent on exceptions and errors.

Digital tools can help you increase visibility into key metrics and processes, like terms and discount, invoice data, workflow approvals, and real-time reporting.

In addition, evaluating your payment strategy to optimize payment types by vendor, size, or term can help you manage working capital and reduce your cost.

So let's start with talking about vendor management.

Now is a great time to reach out to your vendors.

Understand the impact of the current environment on them. But you might be able to talk with them and identify areas of flexibility in your terms or in your contract that can help you meet your current working capital needs.

And how are you evaluating how your purchases are trapped and approved?

If you have remote workforce, how are you balancing the oversight with your purchases and getting the speed of those approvals so that your employees can still remain productive?

So for example, if you have a remote employee that needs to purchase hardware from an unapproved vendor, how do you manage that oversight but also get that employee the tools they need to do their job on a daily basis?

Do you need to also temporarily increase credit limits at certain manager levels or open up merchant category codes for certain levels of authorizations?

Or you might need to prohibit certain merchant category codes.

But evaluating those tracking and approvals on the purchases, and making some changes, and balancing that oversight with speed and productivity is really important right now.

How about invoices and having them matched and processed during this time?

Do you have a remote work staff that's used to receiving their invoices in the mail or with fax, paper copies?

Have you thought about increasing the visibility of those invoices through digital platform or something as simple as asking your vendor to email you invoices and establishing a shared mailbox across your AP team?

What about payments?

How are you initiating your payments today?

Do you have ways to support your daily payment activities with your remote workforce, either online or via mobile device?

Do you have alternatives for initiating those manual or paper-based payments?

Right now, we are seeing more activity than ever across our customer base for check outsourcing because customers are not able to get into offices to print checks.

We are also seeing an increased use in single-use virtual cards that can be managed, requested online real time to make a payment to a vendor.

This is facilitating movement to electronic payment options.

With the virtual card, as Rich mentioned earlier, you have enhanced control, but also are able to extend your working capital due to the extended terms on the card.

And lastly, we have seen a large uptick in the use of prepaid payroll cards to address employees who may not receive direct deposits and need immediate access to pay.

To summarize AP, exploring ways to interact with vendors and employees in a digital fashion has exponential benefits to working capital and payment strategies now during the covered, but also beyond for increased efficiency and visibility.

Next, Mike Jorgensen will continue our working capital discussion.

Thanks, Nicole.

Let's shift gears a little bit and talk about the other aspect of your payments process.

It's just as important to review your collection processes and identify potential gaps and operational constraints.

Similar to payables, you will likely have many manual, paper-based functions to manage exceptions and posting to your system.

Let's take a minute and think about how many of these were or could be easily moved to a remote work environment, especially during this crisis.

During times of decreased cash flow, you need to review your accounts receivable balance often and look for differences in customer behavior and also trends that require changes to your approach in processes.

Let's start by talking about your customer outreach and billing.

Is your customer contact database updated?

And does it include email and text options?

Do you have a way to create custom outreach schedules and easily modify your notification or reminder messages?

If not, you really should consider tools or software packages that would allow you to do so.

Let's also consider your bills and invoices.

Are they being distributed in a timely and efficient manner?

Errors in your billing processes can lead to costly delays in payment receipt.

You should start by documenting your billing process and decrease manual inputs and error rates, and then also consider how you will resolve billing disputes, especially in a remote work environment.

You should also consider distributing bills electronically to reduce dependency on staff.

By doing so, you will enhance efficiencies and encourage adoption of electronic payments, such as online ACH, card, and newer payment options, like real-time payments.

Speaking of payments, think about how they were being received and posted prior to the pandemic.

If we were to ask most companies, they would respond and say that they were doing a pretty good job with some room for improvement.

Now think about what happened when the crisis struck and when you had to implement your business continuity plan.

We started to see some interesting trends.

And let me share a few examples.

In a matter of days, we had a number of customers that had to move their full accounts receivable teams to a work-from-home model.

All of their sites were impacted.

These were teams that were set up to receive, process, and deposit thousands of payments per month.

The mix of payments typically included check, ACH, card, and wire.

The most immediate issues centered around phone and computer connectivity along with the equipment and processes that were largely tied to their office setting.

Some of the employees had laptops. But in many cases, employees had desktop computers, with check scanners and other local equipment in their office.

These companies had to quickly determine if they would require employees to go into the office during the quarantine, or if they could send employees home with their office desktops and scanners, or if they had to quickly implement mobile options that would allow them to do it from their devices.

In many cases, customers took a dual approach and had employees take scanners and computer equipment home while they started implementing mobile solutions.

Some even started assessing lockbox options while others opted to push their customers to online payments that included card and ACH.

Let's face it. It's a very interesting time, and most of us are looking at our business continuity plansand updating them and rewriting them almost on a daily basis.

Think about all you've experienced over the last few weeks, and let's consider the following questions as you look at your business continuity plan.

First, were you able to manage all of your depository processes from a remote perspective?

And can you do that quickly in the future?

Do you have electronic and mobile deposit options that your staff are comfortable using and that they can use in a remote work environment with the appropriate controls and oversight, which is something that a lot of folks hadn't considered before.

Can you accept new electronic payment options easily?

If not, what will it take to make these available in a faster and more efficient way?

For all of your receivables, including card transactions, do you have a way to easily monitor transactions declined and overall status of your receivables remotely?

These are just a few of the questions that we can ask.

I would recommend that you take a look at your payment processes and identify manual steps that are time consuming and that were hard to manage in this crisis, and then start there.

Regardless of payment type received, ensure your processes and partners use electronic and file-based solutions wherever possible and make sure your processes are easy to manage in both an office setting and in a remote work environment.

It's important to improve the accuracy of your overall collection processes. It's just as important to take advantage of digital, mobile, and do-it-yourself functionality wherever possible.

Now I know we covered a lot between payables and receivables.

But knowing the answers to these questions and thinking through them can

help your business understand if there's a risk, expected cash flow, and also to any customer satisfaction issues.

Let's now shift to the very relevant topic of liquidity, which we all know is top of mind.

As we mentioned earlier, it's important for businesses to keep a constant eye on their cash position and liquidity to help you pivot and make any necessary changes while still being able to assess your ability to meet any current or future obligations.

So the first question we recommend digging into is whether your liquidity target needs to be adjustment.

Right now, you should assess the amount of cash needed to account for the variability in expected revenue and your financial obligation.

For some of you, increasing this target in the short term may be a very necessary thing to do.

For others, it may stay consistent with just some slight adjustments.

Based on your findings, determine what funding sources are available to you.

Are you able to access the cash you need in the short term?

It all starts with having a visibility into your cash positions and continues with constant assessment.

Finally, you should think about if and what investment parameters still apply.

If you have excess cash, where does it make sense to direct these funds?

The parameters in place a month or two ago may or may not apply today.

High priority in today's environment is to ensure you are working with a highly rated and strong financial partner.

And with that partner, continually assess and keep visibility into performance and hedging options as well as other liquidity options for your business.

And across each of these, an underlying question is whether you're taking full advantage of digital, mobile, and do-it-yourself functionality.

While these are valuable time savers in a normal operating environment, they can be absolutely essential in today's environment of remote-heavy contingency operations.

Answering these questions can help your business understand if and what adjustments are needed to allow your organization to most effectively operate in this very unique environment we find ourselves in.

Right now, you should consider keeping a constant pulse on knowing your organization's liquidity needs.

And as we all know, that is a delicate balancing act between ensuring that cash is available to meet potential unforeseen needs while, at the same time, optimizing the value of any excess cash you might have.

All right, let's move on to the fourth category and the management of your international payments.

As we've all seen, a global crisis affects the global economy.

First and most important, you need to reduce your risk exposure that is being caused by the many changes in the global market.

Start by researching and asking about hedging opportunities that are available in the FX market.

Then, see if there's an opportunity to quickly redirect purchases from adversely affected regions.

This helps to build contingency plans in the event that there are critical business needs that need to be met by your vendor partners.

And then, finally, reduce the risk by asking what controls have been reviewed to ensure proper approval prior to payment.

This is especially good practice in times of crisis, but it's also good practice and in general, especially if you look at your domestic and international payments.

Especially during a time when there are payments made to international vendors and regions, as we're seeing right now, where there may not be in an existing relationship, it's important to thoroughly review your policy and to control execution.

So with that, I'm going to hand it back to Jeff.

Great, thanks very much Mike. So we hope you found this information to be helpful and thought provoking.

We realize the impact of the COVID-19 crisis impacts each business and market segment in unique ways. There are not many that expected the effects of this pandemic to be so widespread and with such rapid impacts, so we're all learning how to pivot and improve our business continuity plans as the world around us changes quite a bit.

And while every company's response is slightly different, I think listening to the team, there are a few best practices that, I think, span clients across multiple industries and segments.

And I'd lump them into three categories-- fraud mitigation strategies, remote business plan, and liquidity strategy.

So first off, companies should definitely have a strong focus on fraud mitigation strategies.

And this includes updating internal procedures, fortifying your controls, and consistently testing those controls and your workforce.

As Rich indicated, the fraudsters really never sleep, so we have to always have our guard up.

And especially with everyone working remotely and with the federal government potentially doing things to start pushing money in the bank accounts, the fraudsters are going to be really trying to target those funds.

Second, businesses should review and adapt your remote business plan for employees, vendors, and customers.

This plan should allow your company and staff to fulfill all business-critical functions in a remote work environment, including initiating and receiving payments, moving to electronic payment processing, both incoming and outgoing wherever possible, and automating processes.

And lastly, we are seeing companies update their liquidity strategies to take advantage of digital and mobile functionality and to update policies and controls to allow stakeholders to quickly adjust liquidity targets and investment approaches in times of crisis.

The good news is that most mobile services and strategy updates are fairly simple to implement.

The key is to take the time to document what is right for your company and then make sure your employees are ready to act on it quickly and when needed.

As you work to review and ensure your readiness, we understand what that means as it relates to our role as your financial services partner.

And please know that we are taking that responsibility very seriously.

Before I share information on the communication resources that we've created, I wanted to let you know about some of the things U.S. Bank is doing to help minimize the impact COVID-19 has on our customers, our employees, and our communities.

We are temporarily adjusting the operation of our branches and consolidating operations.

We're providing our critical frontline employees with a temporary 20% hourly wage increase.

We have enabled our employees whose functions can be completed remotely to work from home to ensure we can safely and effectively continue serving you.

And for the limited number of positions that do still require in-office work, we're ensuring that social distancing routines are in place, as well as high frequency deep cleaning.

And we've also done things to expand our leave policies to allow employees the time they need to care for themselves and any family members as necessary.

From a community perspective, U.S. Bank is already committed to providing a total of $30 million to human services organizations and local nonprofits to support COVID-19 recovery efforts in communities all across the country.

One of the things we're doing nationally is a $4 million donation to United Way, local initiatives, Support Corp, and Operation Hope to support individuals and small businesses affected by COVID-19.

And then we're making $26 million of local donations in general operating funds to local non-profits across the country to continue supporting individuals and families with financial education, affordable housing, and work assistance.

Just a week after the Coronavirus Aid Relief and Economic Security Act, the CARES Act, was signed, we began to invite small business owners to apply for help through the paycheck protection program, starting with single-owner small businesses, but with plans to quickly expand the program to two-owner businesses followed by nonprofits, independent contractors, and multi-owner businesses.

We're also actively monitoring and preparing to respond to the roll out of the Main Street lending program, which is aimed at companies between 500 and 10,000 employees and $10 million to $2 billion in revenue.

And for our consumer customers, we've modified several of our lending products and services in an effort to make them more affordable and accessible to customers along with relief and forbearance programs for those who qualify.

To better assist you and all of our clients, U.S. Bank has launched a COVID-19 web page on usbank.com to keep you informed of COVID-19-related information as well as publishing a section of frequently asked questions that we're updating daily.

The web page also includes links to help you transition to remote banking, payment fraud prevention tools, market news, and information as it's provided by the Center for Disease Control and Prevention.

Our financial IQ web page includes articles, podcasts, and videos on COVID-specific topics along with other resources to help you manage your business.

In closing, I want to reiterate on behalf of the entire U.S. Bank team that we sincerely appreciate the business relationships that we have with all of you and the trust they have placed in us over the years.

We are absolutely committed to taking the steps necessary to come through this crisis together, stronger, more aligned, and more ready than ever for what comes next.

Thank you again for dialing in to today's webinar, and please do your part to stay safe.

The recording of today's webinar will be accessible in the next several days from our new usbank.com COVID page and on our financial IQ site.

And any follow-up questions you have can be directed to your primary U.S. Bank contacts.

So thank you once again for dialing in, and we look forward to talking to you soon.


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April, 2020

A look at payments in times of change

In this webinar, U.S. Bank leaders share their insights into the payments landscape during changing times

Insights to help your company respond to COVID-19 challenges

4 ways banks can help your business during COVID-19

Solutions your company can implement now

Learn more

Transition to remote banking

Support payment operations in a remote working environment

Use these strategies

Protect your business from COVID-19 scams

Experts share fraud protection tips

Fraud prevention strategies


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