Efficient accounts receivable processing frees up staff to add more value

November 08, 2022

Case study: By upgrading to an automated accounts receivable solution, Power/mation cut the time required to process customers’ payments in half.  

To help clients get the most from their manufacturing processes, Power/mation realizes it first needs to get the most out of its employees. And that focus on working smart applies across the organization, including the financial function, where accounting manager Mike Solarz needed a banking partner willing to evaluate his operation and suggest efficiency-enhancing strategies. U.S. Bank, with its Working Capital Engagement review process, was the perfect fit.

Too much time spent posting cash

Power/mation used to manually apply all its incoming Automated Clearing House (ACH) and check payments, which today numbers about 3,000 items a month, Solarz says. However, as ACH volumes increased and the company had to process those payments using remittance information that came separately, the process became unsustainable.

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Employees in his department were spending approximately 24 hours a week posting cash to customer accounts, and he thought much of that time could be better spent.

Solarz set a goal of moving to an automated posting process that would free up his department to make a greater contribution to the company. “We’re a team,” he says. “We want to help the company as a whole.”

The client:

Power/mation Division Inc., an automation solutions provider with multiple locations in the Midwest.

 

The challenge:

Creating a sustainable, automated method of processing large check payments without losing staff.

 

The solution:

U.S. Bank VantagePoint®, an online receivables management solution.

 

About Power/mation:

Power/mation helps clients in more than a dozen industries – from oil, gas, mining and energy to food and beverage, medical and packaging, and others – optimize their manufacturing processes. The business, based in St. Paul, Minnesota, has automation specialists, engineers, project managers, designers and a sales force serving clients from office locations in Minnesota, Wisconsin, Illinois and North Dakota. Additionally, it has sales force representation in Iowa, Nebraska and South Dakota.

Power/mation offers safety solutions such as custom hard guard fencing, robotics, panel building and process automation to improve production and overall product quality, as well as industrial internet of things (IIoT) tools to boost and monitor system performance and pneumatic components to help lift, move and press in an automated facility.

A bank review of A/R processes

U.S. Bank worked with Solarz and his colleagues to analyze Power/mation’s accounts receivable processes. The review revealed Power/mation could automate, slash the time required to post payments and boost accuracy by using VantagePoint, an integrated receivables platform.

The platform uses business rules and exception queues to integrate incoming lockbox, E-lockbox, ACH, wire and RTP® payments into one interface, providing a consolidated view of received payments and delivering a posting file that achieves a higher percentage of automated cash application.

How VantagePoint makes the accounting team more efficient

When adopting electronic payments, many of Power/mation’s customers have come to rely on email and fax to deliver remittance data. They can’t include the remittance data with the ACH payment. VantagePoint Remittance Reassociation captures the remittance information provided separately by those customers and matches it to the corresponding electronic transaction received by the bank. Using VantagePoint, more than 84% of payments are matched at the invoice level to customer accounts, Solarz says.

By upgrading from a manual cash application process to one in which most payments are automatically applied to customer accounts, the company has cut the time required to process customers’ payments in half.

Furthermore, the percentage of ACH payments that are rejected, requiring manual intervention, has declined by approximately 40 percent.

Ultimately, working with U.S. Bank and implementing VantagePoint, Power/mation was able to free up 13 hours of accounting staff time a week.

"VantagePoint provided a path to improve the effectiveness of our receivables strategy, introducing automation to streamline traditional cash application processes."

Mike Solarz

A seamless transition

The time freed up by the service proved to be a welcome benefit when the company spun off part of its operation into a second standalone business, Power/mation Solutions Group. Instead of having to add at least a half-time employee to handle cash application and other processing for the new business, Solarz was able to maintain cash application staff in his department at current levels and have one employee handle processing for both Power/ mation Division Inc. and the new entity

.“We were a little apprehensive about transitioning to using VantagePoint for both businesses,” Solarz says. “That was a huge change to the overall company interaction with U.S. Bank, but the VantagePoint solutions really handled the change very smoothly.”

A breath of fresh air

Working with U.S. Bank on the receivables processing challenges at Power/mation has been a “complete breath of fresh air,” Solarz says. “The bank took time to learn about us, our operations and procedures, and the areas in which we could make improvements. VantagePoint provided a path to improve the effectiveness of our receivables strategy, introducing automation to streamline traditional cash application processes.”

With the time saved by using the solution, the accounting team has broadened its contributions by meeting the needs of the company’s new stand-alone business.

“U.S. Bank listened to us and identified a solution that has worked very well,” Solarz says. “We haven’t had any glitches or hiccups, and the solution proved very flexible when we split our company into two separate businesses.”

 

To learn how VantagePoint can simplify and streamline your accounts receivable management, contact your U.S. Bank representative.

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Disclosures

RTP® is a registered service mark of The Clearing House Payments Company L.L.C.

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