Case Studies
Pitt Ohio Case Study
Situation
PITT OHIO EXPRESS, a leading regional transportation and supply chain solutions organization, was concerned that its cash application process was highly manual and labor intensive.
Goal
In order to be more cost effective and create better efficiency, PITT OHIO EXPRESS wanted to reduce back office labor costs and position themselves for future growth in the long term by automating the cash application process. Secondarily, they were interested in applying cash faster so A/R data was more timely and accurate; at the time, cash was posted in 1 ¾ to 2 days because keying was manual.
Solution
OPEN SCAN® Receivables Process Management Software Solution
About PITT OHIO EXPRESS
PITT OHIO EXPRESS is a transportation and supply chain solutions provider specializing in Less-Than-Truckload (LTL), Truckload, Ground, and Supply Chain Solution services. PITT OHIO EXPRESS services the entire Mid-Atlantic and Midwest regions with 21 terminals and over 2,200 employees. PITT OHIO is a service organization that is dedicated to consistently providing high-value transportation solutions to its customers. As an organization, they remain committed to innovating in every area of their company. PITT OHIO EXPRESS is committed to their customers, employees, and their community.
Background
In the past, PITT OHIO EXPRESS received and processed payments for 10,000 invoices per day for their LTL service with a staff of four (4) fully dedicated cash application employees in addition to various part-time employees. Even though 80% of payments went through a lockbox, the posting process was mostly manual and slow. The lockbox opened the mail, scanned the contents of the envelopes, and deposited the checks. Once posted on the bank’s Web Portal, the check and remittance images were accessible to the cash application team. At this point, the team members would manually key in the PRO numbers (a transportation specific invoice number) into their ERP system to manually apply cash.
PITT OHIO EXPRESS first learned about OPEN SCAN at the Transportation Revenue Management Group round table. At this forum, existing OPEN SCAN clients were discussing the benefits and results of automating their receivables processes. Historically, PITT OHIO EXPRESS’s executives have been forward thinking and have embraced innovative technologies to solve business problems. While every business is different, PITT OHIO EXPRESS’s Vice President of Administration Diana Early recognized that their business payments were close enough to the other LTL trucking companies who had already installed OPEN SCAN’s Receivables Process Management Solution that PITT OHIO EXPRESS could benefit from it as well. PITT OHIO EXPRESS’s commitment to incomparable customer service with a focus on leveraging people, processes, and technology, fit with OPEN SCAN’s commitment to improve the receivables & collections processes.
The Solution
Open Scan Technologies, Inc. (OPEN SCAN) develops enterprise receivables automation software for corporations. The software addresses the entire receivables function from image and data capture through remittance processing and receivables matching, including deduction / dispute resolution.
In 2009, PITT OHIO EXPRESS selected OPEN SCAN only after investigating multiple alternatives including other software vendors and bank lockbox remittance keying services. Under this new process, the bank lockbox continues to scan documents and deposit funds, but now sends the check and remittance images directly to the OPEN SCAN solution installed at PITT OHIO EXPRESS’s facility.
The software reduced labor costs by automating the extraction of payment data from remittance images provided directly from the bank lockbox in an efficient and “real-time” manner. This eliminated the need for manual keying of data by using proprietary point-and-click templates. The operator captures the desired data using their mouse in a matter of seconds. Each time a future payment from the same customer is received; the template is recalled and applied without operator intervention. This automation and the single screen user interface increased the overall speed of their work environment by cutting workloads and presenting the manual work in a logical concise fashion for processing and research.
“We have a department manager who was initially skeptical about the OPEN SCAN project. So I was pleased to hear that same manager say ‘well thank goodness we have OPEN SCAN’ when one of our A/R clerks had to suddenly go on medical leave. The system is so simple and intuitive that anyone can jump in and help out,” said Diana Early. This also makes it easier to cover scheduled vacation times. The manager said, “Granted we all need to jump in and help for a few hours when someone is absent, but if we didn’t have OPEN SCAN, the work would take days to complete.”
The solution utilizes logic and all the data available in the A/R system and suggests possible invoice matches to the clerk when it is unclear which invoices the customer is paying. In the old system, when the customer didn’t provide the invoice number, the clerk could only search on the account’s name and address. Now the system pulls additional data to match with such as the customer’s bill of lading number, matching dollar amounts, etc.
The Result
In the first six months of processing payments with OPEN SCAN, PITT OHIO EXPRESS’s processing rate went from approximately 50 checks-per-hour to more than 100 per hour. This was a significant increase in capabilities but initially the rate decreased.
Like other LTL carriers, PITT OHIO EXPRESS offers standardized minimum shipment pricing which generates common dollar values. From a process standpoint, these common dollar values along with sequential invoice numbers created an interesting matching challenge. This business-specific practice served to illustrate the flexibility of the OPEN SCAN software. Working collaboratively, PITT OHIO EXPRESS’s IT group and OPEN SCAN’s professional services team were able to configure the system to accommodate this practice thereby maintaining the company’s pricing while optimizing its processing power.
The Checks-Per-Hour diagram illustrates this processing result. PITT OHIO EXPRESS had pre-implementation metrics so they could have an accurate post-implementation analysis.
With OPEN SCAN software in place, PITT OHIO EXPRESS realized the following additional benefits:
- ROI reached just a few weeks past the projected time period
- Significant labor savings - 60% reduction in FTEs
- Cash application went from 2 days to same-day posting
- Productivity increased 75% from Q1 2009 to Q1 2010 (Checks-Per-Hour diagram)
- Significant time saved processing large envelopes
- Payment exceptions reduced by 25%
- Improved quality of work/life for the A/R clerks