Converting to ACH payables: a case study

1. Converting to ACH payables: a case study

2. Welcome! • Intro • Karen, Sarah • Advanced Waste: Early Adopter • 0% to 85% of payments and 95% of dollar volume in nine to twelve months • Agenda: • What we’re not covering • Benefits of converting to ACH payables • Process Advanced Waste took • Methods of Payment Notification • Potential Pitfalls • Q&A

3. Both parties benefit Benefits of paying vendors using ACH: • Reduced Bank Costs • Eliminate Postage Costs, envelopes, clerical time spent matching remittance advice with check and stuffing envelopes • Eliminate checks lost in the mail • Easy Bank Reconciliation as all checks are cleared as a batch vs. individually • Cash flow completely controlled Benefits to vendor for receiving ACH: • Typically “good” funds same day • No more check holds • Reduced depositing costs • Earlier payment depending on agreed upon terms

4. What does it cost to write a check? The cost model as an example is: • Cost of check stock paper • Cost of employees time to process the paper - load paper, stuff checks into envelope, etc. • Prorated cost of toner, printer, etc. • Cost of stamps ($0.46 each if you do not qualify for bulk) • Cost of exception handling (lost or returned checks - have to investigate; stop payment at the bank and re-issue; returned check with invalid address, etc.) • Cost of fraud • Stolen issued checks • Stolen/duplicated check stock

5. The process Getting buy-in internally: • Tech-friendly staff • Top down support • New Software in place • Support team on board • Dual control in place • “Gorilla in the relationship”

6. The process - internal Dual Control – an example: • Payables group creates file • File is uploaded • “Check register” is printed for CEO’s review • CEO Transmits file to the bank • Third person on the team reconciles

7. The process - internal • Once your system is ready, it is time to collect vendor payment instructions • Create a form to send out with your next check run • Include also a letter explaining that the company is moving to ACH for all payments and “we need your information to ensure there is no delay in your next payment” • Have a timeframe goal internally and have everyone following up to ensure goal is met

8. The process - external • Initial effort: Form mailed with invoices returned 30% of payees’ information over the first two months • Second effort: started calling people, which achieved another 20% over the following three months • Continued to call vendors, up to 75% in another four months • “Our payment policy…” • Payment terms changed, favoring those who complied • 40 days via ACH; 60 days with check • Through attrition and slow acceptance for the rest, now at 85% of vendors accounting for 95% of payments • What to do about non-conformists…

9. notification Three main methods of notification: • Custom website • Financial EDI • Emails with payment notification and detail

10. Potential pitfalls Watch out for: • Companies giving you wire instructions • Companies want to debit you instead – do you have a problem with that? • Companies have outsourced payables departments and will not work with you (utilities) • One-time vendors – worth the setup time? • Corporate donations – typically still do checks • “Gorilla in the relationship”

11. Q&A

12. Karen bleach, cpa Karen has been the CFO of Advanced Waste Services, Inc. since 1998, and holds responsibilities for managing all of the company’s financial, accounting and technology functions. She began her career in the Enterprise Division of Arthur Andersen & Co. after receiving her BBA in Accounting from the University of Wisconsin at Oshkosh. She went on to earn her MIS from the University of Phoenix. In 2008, Karen was named a CFO of the Year by the Business Journal in Milwaukee, WI. She is a member of the WICPA, Paranet, and the MMAC’s COSBE Group. She served on COSBE’s Board of Directors from 2005-2011 and is currently serving on the DSHA Finance Committee (2007 – Present).

13. Sarah e. grooms, cTP Sarah E. Grooms, CTP is a Vice President at Town Bank, having joined the bank in May of 2001.  Sarah graduated from Carroll University with a B.S. in Business-Finance. In 2005, Sarah completed the WBA’s Graduate School of Banking at UW-Madison, and has additionally earned her Certified Treasury Professional (CTP) designation in order to best assist clients.  She is currently working on her M.S. in Applied Economics at Marquette University with a specialization in International Business. Sarah has spoken previously for TMANE (Boston), Windy City Summit (Chicago), BizTech (Milwaukee), and the InBusiness Series (Madison) in addition to area colleges, as well as appearing on “InBusiness Radio with Jody and Joan” and Fox6 News - Milwaukee. She is a 2012 Forty Under 40 recipient and was named to the Power List the same year (Business Journal, Milwaukee). She is a member of the AFP and WIAFP and serves on the board of The Women’s Center and on the Tempo Community Impact Committee (Waukesha). She currently resides near Milwaukee, WI with her husband and son.