J.P. Morgan's Order-to-Pay Service Helps Clients Cut Costs and Free Up Cash During Financial Crisis

Clients Realize Significant Savings in Early Payment Discounts While Extending Days Payable Outstanding

NEW YORK , October 20, 2008 — J.P. Morgan today reported that its Order-to-Pay service for business settlement is helping clients significantly cut payables costs and free up cash during the current financial crisis. Based upon transaction data derived from the J.P. Morgan Business Settlement Network (JBSN) through September 2008, many of J.P. Morgan's Order-to-Pay clients are realizing unprecedented savings by taking advantage of early payment discounts, and most have improved working capital by extending Days Payable Outstanding (DPO).

For example, one Fortune 500 client in the telecommunications industry will capture more than $30 million in early payment discounts this year, a 500% increase from its first year of service. Another Fortune 500 client in the pharmaceuticals industry will capture more than $4 million in discount savings, about a 300% increase from its first year.

J.P. Morgan's Order-to-Pay service automates purchase order delivery, invoice and payment processing, and discount management by connecting buyers with their suppliers across a secure settlement network. The service features a no-cost portal for suppliers, while the J.P. Morgan Supplier Services organization helps clients target, recruit and onboard new suppliers.

"J.P. Morgan's Order-to-Pay clients are transforming their financial settlement operations in difficult market conditions and leveraging significant discount opportunities," said Eduardo Vergara, global commercial card executive, J.P. Morgan. "As organizations look to maintain a healthy balance sheet, Order-to-Pay remains a valuable source of liquidity for our clients and tens of thousands of participating suppliers."

Key Performance Indicators (KPIs) for measuring Order-to-Pay performance are derived from the more than $230 billion in business transactions that have been processed to date. Clients can leverage predefined KPIs to set process automation, working capital and supplier management objectives and measure them against industry results.

Early Payment Discounts

In discussions with more than two hundred Fortune 2000 companies, J.P. Morgan found that only 5% of suppliers on average offer discount terms. According to recent J.P. Morgan KPIs, the average Order-to-Pay client is receiving early payment discounts from approximately 30% of participating suppliers, while top performing clients have penetrated close to 40% of Order-to-Pay suppliers for discounts.

The average J.P. Morgan Order-to-Pay client realizes a 1.8% discount on 16% of network spend or about $2.9 million for every billion dollars of spend. Top performing clients are realizing more than $4 million in discounts for every billion dollars of network spend.

Extending Days Payables Outstanding

Even with the increase in the percentage of suppliers offering early payment discounts, J.P. Morgan clients are able to extend their DPO to improve working capital. Average Order-to-Pay clients over the past year have expanded DPO by three days, while one client saw an eight-day expansion of DPO in its first year of service. The ability to maximize early payment discounts while maintaining or extending DPO is based upon J.P. Morgan's best practice recommendations.

About J.P. Morgan Treasury Services

The Treasury Services business of J.P. Morgan is a top-ranked, full-service provider of innovative payment, collection, liquidity and investment management, trade finance, commercial card and information solutions to corporations, financial services institutions, middle market companies, small businesses, governments and municipalities worldwide. With more than 50,000 clients and a presence in 39 countries, J.P. Morgan's Treasury Services ( JPM TS) is the world's largest provider of treasury management services. JPM TS is a division of JPMorgan Chase Bank, N.A., member FDIC. More information can be found at jpmorgan.com/ts.

About JPMorgan Chase & Co.

JPMorgan Chase & Co. (NYSE: JPM ) is a leading global financial services firm with assets of $2.3 trillion and operations in more than 60 countries. The firm is a leader in investment banking, financial services for consumers, small business and commercial banking, financial transaction processing, asset management, and private equity. A component of the Dow Jones Industrial Average, JPMorgan Chase & Co. serves millions of consumers in the United States and many of the world's most prominent corporate, institutional and government clients under its J.P. Morgan, Chase, and WaMu brands. Information about JPMorgan Chase & Co. is available at jpmorganchase.com.