Global Treasury Management Revised June 2012
About BMO
BMO Financial Group Overview l Established in 1817 as Canada’s first chartered bank l Ranked 8 th largest bank in North America by total assets of US $532 billion 1 l Offering a full range of personal and commercial banking, wealth management, correspondent, investment and corporate banking services in Canada and the U. S. l Serving over 12, 000 clients, small and large, throughout North America l Serving over 800 correspondent banking relationships across 130 countries throughout the globe l Serving over 40 Schedule I, II and III Banks and Credit Unions in a Direct Clearing banking partnership l Nearly 1600, Branches and offices – 900+ Canada and International; 650+ in the United States 1. Source: (SNL Financial, 05/31/12)
BMO Financial Group F 2011 Net Income by Operating Group Key Operating Data Market Cap* Total Assets* US$532 billion F 2011 Revenue US$13. 6 billion Employees* Private Client Group US$38 billion 46, 500+ Personal & Commercial Banking *As at April 30, 2012 BMO Capital Markets ADVISORY SERVICES l Mergers & Acquisitions l Strategic Advisory l Fairness Opinions l Takeover Defense l Share Buybacks l Valuation Analysis CORPORATE FINANCE l Initial Public Offerings l Follow-on Offerings l Convertible Securities l Mezzanine Lending l High-Yield Debt l Investment-Grade Debt l Corporate Lending l Securitization l Private Placements SALES & TRADING l Institutional Sales l Trading l Equity Research l Fixed Income Research l Investor Marketing l Investor Conferences l Account Sponsorship l Retail Distribution 3 TREASURY SERVICES l Cash Management l Risk Management l Asset Management l Foreign Exchange l Trade Finance
Global Treasury Management at BMO Capital Markets l We Process: l Global service and solutions l Actively shaping the future of the payments industry: n Member of Canadian Payments Association, NACHA and American Bankers Association n Founding partner of Symcor and Moneris, leading providers of payment processing Value 318, 528 Canadian dollar payments per year CAD $915 billion Extensive payment, receivables and information reporting capabilities l Transactions Wire Payments Sophisticated web-based treasury management platform with 15, 000 Online Banking for Business customers, and 50, 000 Online Banking for Business users All of BMO: 1 Million Items All of BMO: $1. 3 Trillion Electronic Payments 321 million EFTs processed per year CAD $925 billion Paper Payments 223 million checks per year CAD $854 million Full-service treasury management provider for over 35 years 4
Our Solutions
What Sets Us Apart l Commitment to service l Continued investment in our business l Experience, cross-border expertise and scale l Global solutions l High quality, proven solutions l Customizable solutions that produce highly-satisfied customers l Highly-satisfied customers l Trusted treasury management advisor Superior service. Working capital expertise. Innovative solutions. 6
Information Solutions
Information Solutions Online Banking for Business 8
Online Banking for Business Overview l Online Banking for Business is a web-based cash management solution n n Real-time account information (mech accounts only) Single source for all treasury management products and reports Flexible administration tools Ability to designate multiple users and approvers Receive Alerts l Make timely and informed business decisions l Save time with easy, anywhere access l Gain added security and control l Only need a PC and an Internet connection l You can choose the services you need today and add modules as your business needs change Online Banking for Business supports full single sign on and private label functionality enhancing the end client experience
Online Banking for Business: Our Web-Based Treasury Management Platform Online Banking for Business features: l Account Information l e-Statements Account Transfers Auto. Connect Stop Payments Electronic Funds Transfers Tax and Bill Payments l File Transfers & Cross-Border Transfers l Centralised Customer Self-Administration l Direct. Cheque Stops and Inquiries l Wire Payments l Check Image Search l Bulk Image File Delivery l Archiving Alerts & Notifications l l l Select the modules you need today and add services as your business needs change 10
Online Banking for Business: Benefits Increased control l Timely information allows customers to make informed business decisions l Customers can control their own administration by setting up and deleting users in seconds, as well as resetting user passwords Convenience l Allows customers to access their account information and perform transactions around the clock - from their own PC l Customers can receive all of their cash management reports electronically through file transfer facility Flexibility l Tailor services to match their specific needs l Choose only the modules they need today and add modules as their business grows Security l Online Banking for Business uses 256 -bit encryption, the strongest form of encryption generally available in Web browsers today l Requires 2 levels of user IDs and passwords l Ability to limit user access by account, report template, transaction type and dollar amount
Online Banking for Business: Our Web-Based Treasury Management Platform l Flexible administrative tools allow you to: n Set up and delete users, reset passwords n Set up alerts and notifications of incoming, outgoing and pending transactions, exception items, available statements, user information and balance thresholds n Create customized user profiles and assign access to accounts and service modules n Set dollar amount limits and approval requirements on payments n Generate admin reports that allow you to comply with SOX requirements by tracking all admin changes and documenting user entitlements n Automate and schedule the secure downloading of Online Banking for Business reports l The Online Banking for Business platform maintains a multi-level security system that includes: n Minimum 256 -bit encryption, firewalls and system controls n Two sets of user IDs and passwords; mandatory password changes n Up to 3 administrative approvals n An authentication device for payments n System time-outs for inactivity and log outs for incorrect password attempts l Optional Security Features: n Limit administrators to have Administrative Privileges only n Add Multiple Approvals for all administrative changes Comprehensive administrative and security features put you in control 12
Connecting to the Bank – High Speed Connectivity l BMO launched new high speed connectivity options to exchange files with customers. The new options are offered in conjunction with GXS (Global e. Xchange Services). l Supporting the most widely used communication protocols including AS 2, Secure FTP, and VPN; GXS is able to meet and exceed our customers robust needs. l GXS offers special connectivity that customers currently do not receive via Online Banking for Business FTF (e. g. scripting). New options address the needs of both large corporate customers and small businesses who require automated file exchange. l These features help our customers to automate file exchange with much needed confidentiality, speed, integrity, and authentication of transferred data l New options address the needs of both large corporate customers and small businesses who require automated file exchange
File Connectivity - Benefits l Improved, Dependable, and Secure access anytime anywhere via the internet l Increased Flexibility and Time Saving by automating file and report processing l Improved Integration and Cost Savings for companies of any size by using the latest industry standard business to business technology l Customers may select from various connectivity options offering real time communication l Manual operator may not be required; therefore minimizing the risk of file manipulation (SOX compliance)
GXS vs FTF Features File Transfer Facility GXS High Speed Internet Access Available Server to Server Transmission Not Available Scripted Automated File Exchange Not Available Encryption Available Security 128 Bit Encryption No - Manual Compliance Component e. g. Operator required to SOX process files Ability to Transfer Large Files Not designed to (Over 10 Mega Bytes) transfer large files Technology Support / Supported and Maintenance updated Image Transfer (Future) Not Available 256 Bit to VPN IPsec Encryption Yes – Encrypted, Automated, and can be Scripted Able Supported and updated Available
Payables Solutions
Payables Solutions 17
Direct. Cheque l A low cost, fully automated check processing and reconciliation service designed for businesses that issue a high volume of checks Checks issued Features l Checks are cleared and sorted by serial number l Our check validation service combines: n Positive Pay option matches check serial numbers and amount to your issue file n Daily file sent to BMO Optical Character Recognition used to match the recipient name and address in your issue file l Make decisions to accept or return checks online l Reconciliation reports are produced to coincide with your accounting cycle Benefits l Streamline check processing and reconciliation l Mitigate the risk of fraud Once checks are cleared, the cancelled checks and paid item file is returned to you Mitigate check fraud through the use of Positive Pay 18
Firstbank Automated Clearing System (FACS) l A convenient and efficient alternative for check clearing that employs highspeed check reading technology for clearing and processing Features l Receive a Paid Item File (PIF) detailing paid check information on a next day basis l Choose from numerous reporting options available, both paper-based and electronic l Choose to have cleared items returned daily or checks retained at the Bank for up to 30 days l Thousands of images received of your cleared checks via our bulk image delivery service Benefits l Maintain control over check verification, returned items and stop payments l Facilitate accurate record keeping Checks are processed by the Bank using high -speed check clearing and MICR technology Cleared checks are sorted in date, amount or check serial number order and packaged for client pick up, dispatched directly or retained by the Bank for up to 30 days Paid Item File is available in hard copy or via any of the supported electronic file connectivity options A check clearing alternative for large volume check issuers 19
Electronic Funds Transfers (Credits) l A convenient and cost-effective way to electronically credit employee and supplier accounts at any Canadian financial institution in Canadian or US dollars You send payment files to BMO Financial Group Features l Create electronic payments and transmit files via the Online Banking for Business platform l Perform online tracing, corrections and recalls through a single application l Recall individual credits, batches or whole payment files l Reports are delivered electronically Access a full range of online post-file delivery functions via Online Banking for Business Benefits l Control timing of payments l Reduce operational costs l Reduce the risk of late payments Funds are deposited directly to payee accounts at BMO or other financial institutions Most robust range of post-file delivery functions available in the Canadian market 20
Outbound Wire Payments l A comprehensive wire payments management service that enables you to initiate Canadian and US dollar wire payments easily and efficiently from your office computer. Features l Send one-time payments or create payment templates for recurring transactions l Import wire payment instructions l Future date payments up to 30 days in advance l Receive customized summary and detail reports l Provides full control over outgoing wires, post transaction amendments, cancellations and investigations l Approve and release wire payments through your i. Phone or Blackberry You submit payment instructions to BMO Financial Group electronically BMO Capital Markets processes your payment instructions and forwards the funds to the payee’s financial institution Benefits l Finality of payment l Increase security and control l Send payments quickly and easily from your PC Send Canadian and U. S. dollar wire payments from your PC 21
Tax and Bill Payments l An easy and convenient way to submit utility and corporate bills, as well as Federal and Provincial tax payments via the Internet Features l Convenient web access l Easy-to-use payment templates l Enter payment details by midnight the day before due date or up to one year in advance l Receive tax refunds faster, right into your account. Benefits l Control timing of payments l Reduce the risk of late payments l Reduce paperwork l Submit utility and corporate bills, federal and provincial tax payments electronically and track payment details online Simplify record keeping and reconciliation Fully web-enabled through the Online Banking for Business Platform 22
Imaging Services Check Image Search: l Flexible search options l Download and print options l Archive available as far back as 100 days CD/DVD ROM: l Easily search, retrieve, view, download and print images of processed checks individually or in batches l Choice of CD (up to 15, 000 images) or DVD (up to 100, 000 images) l Encrypted images offer increased security Bulk Image Delivery l Daily, electronic delivery of check images l Optional (PGP) Pretty Good Privacy file encryption available for extra internet security Images can be accessed in a variety of ways: online, via CD/DVD; or via electronic file delivery 23
Payables Outsourcing l A fully automated payment processing service that offers the flexibility of initiating paper and electronic payments through a single file You send a payment file to BMO Financial Group Features l Send a single payment file to execute multiple payment types l Payment files are validated for accuracy l Receive summary and detail reports online l Digitized signatures and printed checks are held under dual custody l Benefits l Streamline payment processing l Mitigate the risk of check fraud l Reduce check printing costs We process and deliver the payments in the requested format Vendor • • • Wire transfers EFT – BMO (CDN/US) ACH – Harris (US) Financial EDI – BMO (CDN) Financial EDI – Harris (US) Check printing Streamline payment processing by initiating paper and electronic payments through single file 24
EDI Origination l A computer-to-computer electronic business exchange that facilitates the electronic payment of funds and related payment data You send the payment file and remittance advice to BMO Financial Group Features l Choose from several remittance data delivery options without having to be EDI-capable l Send payments and supporting documentation on the value date Benefits l Control timing of payments l Reduce processing costs and errors l Improve trading partner relationships Vendor Funds and supporting information are then forwarded to the payee’s financial institution Electronically submit payments and accompanying details to your business partners 25
Receivables Solutions
Cash Concentration – Between BMO Accounts l Consolidate deposits into your central BMO business account for fast, convenient access to your funds. Features l Deposits are automatically consolidated l Deposits can be made at select BMO Bank of Montreal branches l Detailed consolidation reports are available online l A 25 -character alpha-numeric message field provides supporting information Benefits l Minimize excess balances l Monitor deposit activity of individual outlets Your outlets deposit funds at selected BMO branches Receive immediate access to funds l The deposits are automatically moved to your central BMO account Receive detailed consolidation reports Improve cash flow by consolidating deposits from multiple locations into a central account 27
Cash Concentration – Between Financial Institutions l Consolidate deposits made at any Canadian deposit-taking institution into your BWB account – by phone or web. Your business outlets can deposit funds at the nearest financial institution, while you retain quick and easy access to your funds Features l Draw. Cheque transfers can be completed online or via a toll-free IVR system l 24 x 7 access via the web; extended hours access to the IVR system l Same day value for payments received by 7: 00 PM ET l Funds are deposited into your account three times each day l Third-party transfers between B 2 B relationships for Accounts Receivable purposes Benefits l Enjoy convenient and cost-effective deposit management and funds concentration l Access comprehensive on-line reports and 90 -day rolling archive l Minimize risk with advanced security controls and optional dual-authorization l Control access through user-friendly online administrative tools Conveniently and cost-effectively consolidate deposits into a central BMO account 28
Electronic Funds Transfers (Debits) l A convenient and cost-effective way to electronically debit your customers’ accounts at any Canadian financial institution in Canadian or U. S. dollars Features l Create electronic debits and transmit files to the bank online l Perform online tracing, corrections and recalls through a single application l Reports are delivered online l Recall individual debits, batches or whole payment files l Benefits l Control the timing of payments l Increase operational efficiencies l Improve customer relations Access a full range of postfile delivery functions via Online Banking for Business You send payment files to BMO Financial Group detailing your preauthorized debits Funds are automatically debited from your customers’ accounts on the value date and deposited into your BMO account Most robust range of post-file delivery functions available in the Canadian market 29
Wholesale Lockbox l An automated receivables processing solution that accelerates your B 2 B check-based remittances and consolidates deposits into a single account Features l Funds are consolidated into a single account l Receive detailed transaction reports and daily deposit advice packages l Access and retrieve images online l BMO collects payments directly from Canada Post and processes them for same-day credit Multiple processing sites across Canada l Checks and supporting payment data are mailed to strategically located Canada Post postal stations Receive thousands of images at a time via our bulk image delivery service Benefits Receive a daily file with all remittance data information l Reduce mail float l Reduce processing costs and effort l Consolidate deposits into a single account l Convenient imaging options online, CD-ROM or Bulk Image Delivery service Improve cash flow by automating the processing of your check-based remittances 30
Remittance Consolidation l A flexible receivables service that consolidates paper and electronic payments made through BMO or other Canadian financial institutions Features l Receive same-day credit for all payments made through BMO Your customers submit payment by: • l Consolidate payments made at other financial institutions • l Receive a daily payment report and/or file • • Internet Telephone ABM Branch Benefits l Consolidate funds from multiple sources and deposit to single account l Reduce manual payment processing l Reduce the incidence of late payments Receive daily file with all remittance data information Receive same business day value for all payments made through BMO 31 The funds are credited directly to your BMO account
Electronic Chargebacks l Receive electronic notification of chargebacks that occur when a check you deposited to your business deposit account is returned by your payer's bank. Features l The Electronic Chargeback file captures the reason the check was returned, the name of the payer and MICR information of checks. l A Null File is delivered if there were no chargeback check for that processing day. l Continue to receive a Return Item Advice for any dishonored items. Benefits l Decision your checks faster. l Collect funds owed faster and better manage your cash flow. l Chargeback Advices • Provides reason for return • Includes advice # Be quickly notified of returned items and easily update your own database with information on the items that have been returned to you. l Chargeback Images • Black and white • Front and back Turn the manual process of dealing with chargebacks into an easy automated process. l Continue to receive a physical copy of: More easily flag potential bad accounts and possibly hold back shipments Turn the manual process of dealing with chargebacks into an easy automated process. 32
Incoming Wire Payments l A convenient way to receive customer payments electronically from both domestic and international locations Funds are wired to BMO from anywhere in the world Features l Domestic and international payments l Multiple notification options through FAX, Online Banking for Business and others. l Up to 140 characters of reference information l Full amount of wire payment credited with fee charged as a separate transaction Benefits l Receive irrevocable payments from anywhere in the world l Track and identify payments easily The incoming funds are credited to your account as soon as they are received by the bank … Receive domestic and international payments quickly and easily 33 … receive an optional faxed payment advice immediately
EDI Collections l A computer-to-computer electronic business exchange that facilitates the electronic collection of funds and related payment data Features l Choose from several remittance data delivery options without having to be EDI-capable l Payor’s FI The payor transmits the payment file and remittance advice to their financial institution Receive funds and supporting documentation on the value date Benefits l Improve cash flow l Eliminate manual processing l Improve trading partner relationships You view payment information via an electronic file or by fax Funds are then transferred to BMO and credited to your BMO account Receive payments and accompanying details from your business partners electronically 34
Customization Customized Information Delivery l BMO’s expert advisory service that reviews your multiple data sources and recommends a quick and easy integration solution with output files or reports tailored to your specifications. l Performed entirely by BMO’s IT mapping team freeing up your internal resources l Supports informed decision making with targeted management reports l A streamlined process delivers: n Reduced costs through automation and ERP integration n Seamlessly integrated data with your existing in-house accounting software and systems n Improved capabilities to accelerate data exchange and reduce barriers to partnerships n Ability to monitor transaction data end-to-end n Can reduce delays and errors created by multiple application, system fixes and patches n Can deliver reports based on preferred format and/or map to an industry standard externally such as XML n Convenience and Security - can be combined with our existing BMO line of products i. e. EFT/Wires/DCH/EDI/others and secure high-speed transmission methods i. e. : GXS with PGP encryption or FTF (File Transfer Facility) One-stop shop for all your mapping needs 35
Appendix
Industry Trends Technology Market l Web-based service delivery platforms l Corporate treasury centralization & “in-house” banking l Image technology initiatives l l Connectivity and integration challenges associated with web services (STP) Business process outsourcing (BPO) of treasury functions l Service provider consolidation – consultative partnerships with preferred vendors l Cash flow visibility through treasury automation l Paper to electronic payment conversions Regulatory l Sarbanes Oxley – Implications for Canadian organizations l Evolving role of the CPA in the technology-driven payments arena Keeping you informed is our business 37
CPA Rules Regarding Check Fraud Reason Time Frame to Return Via Clearing Altered item: Original check (amount, payee, and/or date) has been changed without the knowledge or consent of the issuer 90 days Counterfeit: A reproduction of an original, legitimate check Missing Endorsement: Next business day Up to 6 years in the clearing Signature of drawer is missing Forged drawer: Signature of drawer (person or company issuing the check) has been forged Next business day Forged endorsement: Unlimited (CPA) Signature/endorsement of payee has been forged Bills of Exchange Act requires drawer to notify drawee bank within 12 months 38
CPA Rules Regarding EFT Exceptions Reason Time Frame to Return Via Clearing Unauthorized debit with PAD agreement l Business - 10 calendar days after date on which the PAD was processed to payor’s account l Personal – 90 calendar days after date on which the PAD was processed to payor’s account Unauthorized debit without PAD agreement l 90 calendar days after date on which the PAD was processed to payor’s account EFT credit error correction l No later than 4 business days after delivery of the original credit transaction OR l l 39 3 Business days after the date the funds are to be made available of the original transaction (e. g. late transactions) *It should be noted that both recourses are contingent on the funds being available to retrieve
BMO – Your Partner in Fighting Fraud l Web-based treasury management – Online Banking for Business: n n n Access management Session management User management - transaction, account and user thresholds and controls Secure transactions File confirmation l Payables Plus – payables automation and outsourcing – EFT, EDI, wires, check l Positive Pay/Reverse Positive Pay – check fraud prevention tools l Check imaging 40
Disclaimer These materials are confidential and proprietary to, and may not be reproduced, disseminated or referred to, in whole or in part without the prior consent of BMO Capital Markets (“BMO”). These materials have been prepared exclusively for the BMO client or potential client to which such materials are delivered and may not be used for any purpose other than as authorized in writing by BMO assumes no responsibility for verification of the information in these materials, and no representation or warranty is made as to the accuracy or completeness of such information. BMO assumes no obligation to correct or update these materials. These materials do not contain all information that may be required to evaluate, and do not constitute a recommendation with respect to, any transaction or matter. Any recipient of these materials should conduct its own independent analysis of the matters referred to herein. “BMO Capital Markets” is a trade name used by BMO Financial Group for the wholesale banking businesses of Bank of Montreal, Harris N. A. and Bank of Montreal Ireland p. l. c. , and the institutional broker dealer businesses of BMO Capital Markets Corp. , BMO Nesbitt Burns Trading Corp. S. A. , BMO Nesbitt Burns Securities Limited and BMO Capital Markets GKST Inc. in the U. S. , BMO Nesbitt Burns Inc. in Canada, Europe and Asia, BMO Nesbitt Burns Ltée/Ltd. in Canada, BMO Capital Markets Limited in Europe, Asia and Australia, and BMO Advisors Private Limited in India. BMO does not provide tax or legal advice. Any discussion of tax matters in these materials (i) is not intended to be used, and cannot be used or relied upon, for the purposes of avoiding any tax penalties and (ii) may have been written in connection with the “promotion or marketing” of the transaction or matter described herein. Accordingly, the recipient should seek advice based on its particular circumstances from an independent tax advisor. 41
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