Case Studies
YRCW Case Study
Situation
YRCW has determined its cost for remittance data extraction from the bank is excessive and its internal process has become increasingly inefficient.
Goal
Improve operating margins in the cash application and remittance processing areas while re-establishing process control. Specifically looking to decrease costs, improve data quality and increase the speed of line-item cash posting.
Solution
OPEN SCAN® Remittance Processing Automation Software Solution
About YRCW
YRC Worldwide Inc., a Fortune 500 company and one of the largest transportation service providers in the world, is the holding company for a portfolio of successful brands including YRC, Reimer Express, YRC Logistics, New Penn, Holland, Reddaway, and Glen Moore. Building on the strength of its heritage brands, Yellow Transportation and Roadway, the enterprise provides global transportation services, transportation management solutions and logistics management. The portfolio of brands represents a comprehensive array of services for the shipment of industrial, commercial and retail goods domestically and internationally. Headquartered in Overland Park, Kansas, YRC Worldwide employs approximately 60,000 people.
Background
In the transportation industry, the processing of customer payments tends to be very time and labor intensive. Like most large corporations, YRCW receives wholesale payments at various lockboxes. This means paying tens of thousands of dollars each month in re-occurring data extraction keystroke fees to their bank lockboxes. Until now, the only alternative for processing payments was to in-source the process. This option would add to the already substantial cash application staff required to reconcile the payment information that the bank either keys incorrectly or cannot resolve to YRCW’s four separate A/R systems.
This option also increases in-house costs associated with hiring, training and related incremental resource requirements to handle an increase in staff. As YRCW grew through acquisition, bank keying fees related to their incoming accounts receivable documents grew as well. With nearly 3 million transactions annually (accounting for approximately 18 million invoices), their bank costs reached six figures and they began to realize more inefficiencies in their cash application process.
Historically, the banks were able to post 75% of incoming invoices from the bank file; however there was no validation of data accuracy. Any misapplied payments were not detected until later in the cash application process when they were more difficult and expensive to fix. The remaining 25% of the invoices had to be posted manually. This typically took 1-3 days to ensure they were applied accurately in the respective operating companies’ legacy environments, and only after cross-company payments had been identified by hand.
YRCW had identified a business problem. They had a highly inefficient manual process that provided them limited visibility into their receivables resulting in less than optimal process control. As a supporter of new technologies, the Treasury Manager had begun seeking an automated A/R solution that would:
- Improve efficiencies and decrease costs
- Improve posting timeliness
- Improve data quality
- Re-establish internal process control
- Identify cross-company payments
Solution
OPEN SCAN software eliminates costs and reduces labor by automating the extraction of payment data from remittance images. It eliminates the manual keying of data with 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 customer comes in, the template is recalled and applied. The software is able to increase posting accuracy by matching the incoming data with existing open A/R aging data at the invoice level. This feature not only increases the posting hit rate but also the posting hit rate accuracy, thereby reducing the manual reconciliation labor requirements.
Epilogue
As part of an annual internal compliance audit, YRCW tested the OPEN SCAN system for application efficiency in September 2009. Over five (5) days, the system processed 21,330 transactions, totalling $41,659,173. A random sample of 826 payments was selected for analysis.
- Within this sample, four (4) payments were misapplied, resulting in a net weighted total accuracy rate of 99.5%.
- Of the misapplied four (4) payments, two (2) were applied by staff, and two (2) were applied by the system.
- 90.1% (744 payments) were automatically applied by the system with a 99.997% accuracy rate.
- 9.9% (82 payments) were applied manually by staff with a 97.6% accuracy rate.