Fixing Cash Application to Achieve 95% Straight-Through Processing

Julie Weaver:

This is a case study, this is how Caliber Collision implemented the HighRadius cash application tool for ACH payments. So basically, our challenge was that we had a million payments that were processed manually, which was done annually but that was also manual and we had ten different processes for ACH reconciliation. As a collision repair company, our ACH payments were coming in from our insurance companies and State Farms. And we had ten different processes, one for each. So what we did with HighRadius is we achieved a 95% hit-rate with our matches and then our FTEs were able to be reallocated to more important tasks. So we’re going to go over a little bit about Caliber Collision, our receivables process where we were going to talk about the major challenges, the key considerations of automation, the solution, and the results.

Julie Weaver:

So a little bit about Caliber. Caliber is America’s largest collision repair company and I’d extend that even to the world as the world’s largest. We recently merged with Abra Collision, so we have now over 1000 locations. We have a presence in 37 states. We had a million payments, different processes for each one and what we mean by different processes is for, say state farm, EFTs were coming in, we went to the state farm portal and pulled down the remittances. Whereas for progressive, we would get an email from progressive and look at those emails for the remittance. We use an ERP system called CCC1 which is proprietary for the automotive industry and inner guide it with our in-house accounting for processing. Our team structure, the structure of our IR department is that we have 5 coordinators and 3 analysts. The coordinators are the ones that are doing the day to day work. Before HighRadius, those coordinators would pull the data and put it all on a spreadsheet and we would re-look over to the A/R that we had pulled in and that’s how the payments would be matched and anything that didn’t match would be done as a separate process. Then our analysts worked the exceptions, they would take that spreadsheet about payments and later after the day ended, they would go back every day and try to match it.

Julie Weaver:

So our Cash Application process and challenges. So, this is before HighRadius, we manually pulled bank statements, we manually downloaded remittances from different sources, we manually aggregated different remittance information from emails and we manually put that information on a spreadsheet and did the review for matching. If it matched, it was uploaded to our ERP. If it didn’t, it was added to an exception report. So this is just going through all of the different manual processes. We manually reconciled the payments with the bank statement. The analyst logged into insurance portals as many as five hundred times per day to receive claims information now that we’ve had this merger with Abra. This is specific to Geico Insurance which had a remit login per location.

Julie Weaver:

So with five hundred locations, we logged in five hundred times, we had three coordinators spending an hour of their day logging into these portals and pulling out information. That’s why HighRadius has been so valuable to us. Some of the other insurance companies’ logins were set up differently. Some of them were just one single login for all centers. Some were by state. Even by state, that’s pretty painful with 38 states. So the time and productivity were lost and we were manually really doing everything. Additionally, there were more errors because of the manual process, the lookups, and just all the manual input.

Julie Weaver:

This is just a question for the audience– Which activity in your existing cash application takes the most time? Is it capturing details from the check stubs? Is it processing remittance for electronic payments? Matching payments to invoices? Coding deductions? Or other?

Julie Weaver:

Key considerations: When we were looking for an automated process, I thought what even got me thinking about HighRadius as I was at a conference, a Treasury conference where HighRadius spoke and they started talking about the different ways that they can use robotics to log into the portals. And that just really got me thinking about our process and how that would help us. So we wanted to automate our ACH payment processing. Currently, we still do checks and credit cards manually, so to speak. We wanted to automate our claims and remittance aggregation.

Julie Weaver:

We wanted to achieve a hit rate on invoice matching of at least 90 percent. We wanted to enable integration with our ERP and eliminate manual rework for handling exceptions. The solution here, we’re rehashing, before with our manually pulling the bank statement, manually downloading remittances and looking at the emails and manually putting it on a spreadsheet and doing the re-look up. And this is how it is now, everything that was manual before is now automatic. The bank file is automatically received by HighRadius. The remittances are automatically downloaded from the website. The information is captured in the aggregation engine which is happening automatically. And the matching is happening automatically. So our coordinators, when they come in the morning, they’re logging into the HighRadius tool and they’re only working the exceptions and the exception type that we get is either where there was no remittance found for that dollar amount or where there was no A/R match.

Audience Speaker:

Is this for ACH or all types of payments?

Julie Weaver:

For us, we’re using it for ACH only.

Julie Weaver:

So here’s an example of what an email remittance would look like and the information that’s captured by HighRadius. Notice it there, it’s going to HighRadius. What we did was we forwarded our remits to HighRadius. Everything that comes in from the progressive is automatically going to HighRadius. And then it knows from the subject line which customer it is and then it’s picking up the claim number which is our invoice number and the amount. And this is a picture of it in the HighRadius tool in the received data. It has received this payment and then this is the transformed data. The second tab was where it matched the payment. This is an example of a portal and the information that is captured from a portal. So it’s looking at the check amount, check number and claim number pulling that information from the portal and then here it is, where it’s matched. HighRadius has received the bank file with that dollar amount. It has received the portal information and it has been able to make that match with our A/R file.

Audience Speaker:

What kind of file are you receiving from the bank?

Julie Weaver:

It’s a standard BAI file.

Audience Speaker:

It’s not for EFT payments?

Julie Weaver:

No, it’s for EFT and ACH payments. It’s just that it’s not going through a lockbox.

Julie Weaver:

Our results: We’ve achieved ninety-five percent hit rates. We were saved twenty-five percent of our time. We’ve been able to reallocate our employees to higher-level tasks. And we’ve saved twelve man-hours per day. There are better process control and standardization of operations. I think that’s been a big win for us too. Instead of having 10 different processes that you have to train employees on, it’s now the same for all of them. They’re going into HighRadius. They’re working everything the same way. So it helps with trainability and this is just a quote, that HighRadius has really been a game-changer for us, eliminating manual and non-value-added tasks.

Audience Speaker:

What’s the reason you’re not providing the lockbox side of this interview?

Julie Weaver:

Well, we don’t have a lockbox. We really encourage electronic payments and we do get checks but they’re actually coming to our corporate office and we are currently processing them manually. So we are putting the information on a spreadsheet from the check stub and doing the matching. So we still have some work to do on our hands.

Audience Speaker:

So you said from the email, it knows which customer it is, using the subject line. So how does that work?

Julie Weaver:

Yes, it can tell who the email comes from. That’s how they know which customer it is. It’s automated.

Audience Speaker:

When you implemented it, how many bank accounts did you guys have that you implemented into this process?

Julie Weaver:

We use one bank. However, in these, we have our insurance accounts set up as different sub-accounts. So there were 10 bank accounts.

Audience Speaker:

In that implementation, do you feel it made it a little more difficult?

Julie Weaver:

I didn’t think it was difficult. It does take the bank a little bit of time to get that BAI file flowing. But it is a standard file and once it came in, we didn’t have any issues with it.

Audience Speaker:

So did you have any issues within the foreign banks?

Julie Weaver:

We don’t have foreign banks. So we probably are a little more simplistic than some companies.

Audience Speaker:

The cost of HighRadius was cheaper than the work hours?

Julie Weaver:

Absolutely. That’s really what we based our analysis on when we decided to do it. It was a big factor. Some things that we learned with implementing is that – When we started, we did two accounts first. I think our most painful ones are Geico and Allstate. So we did two first and then we did the rest, six months later or so. And I think that was a good way to do it because we learned how to use the system before we went full out with the rest. So that was one learning experience. Another is, when you implement, you take away the old way of doing things from the analysts. And the reason is we had a few that we didn’t realize for a while. They were still doing it the old way and the new way. And that’s not efficient. But just because they wanted that comfort of doing it, making sure that the results were the same both ways which I’d recommend doing that for a week or two but not ongoing.

Audience Speaker:

Did you face any issues?

Julie Weaver:

We really didn’t. But like I’ve heard some other people say is once you implement automation, it doesn’t mean that you never have to do anything again. You do have to constantly maintain the system. We have a HighRadius super-user, that’s what we call her and especially like I mentioned with our Geico, every time we add a center we have to add a login. So we’re always adding a login. And you know it’s great that somebody actually understands how the whole system works. So that way they can pinpoint a problem if there is one. And she’s also the one who puts in all the tickets so when there’s an issue, they go to her. She knows what’s going on usually so she can put in a ticket that makes sense to the team that receives it.

Audience Speaker:

What’s the implementation of the additional accounts and analysis?

Julie Weaver:

Well, it took us a while just because it was on our end. First of all, HighRadius will come in and they’ll look at your current process and thoroughly understand what you’re doing and then they will ask you for another solution. We had that obvious issue with GEICO and all those logins so they asked us if we could go back to GEICO and we could try to get the file in a different format or in some other way so we didn’t have to go through that. And that took a while. Opening up that conversation, going to GEICO, having that conversation and the timing was kind of around holidays. So that slowed things down a bit. So that was that first phase which was a bit slow. But once we got past that and started and had a plan then it went really quick. And then once it was ready, it went really quickly. So our testing phase went real quick. Our testing phase is about two weeks and that would be another thing depending on your business you might want to get some on-site help to walk you through how to process because when we got the tool up and running and ready to test, it was kind of like here it is. It’s ready to test it and we didn’t know what button to push? How are we supposed to work it? We’ve been working with HighRadius, so we knew the basics but there was a lot more that you learn after you’re doing it. And that’s another reason I think it’s great to have the phase-in process but it’s really simple. After you get the hang of it, it’s a very simple tool.

Audience Speaker:

Is there training material?

Julie Weaver:

There is training material and it is on the HighRadius side. So you can pull that down and use that. We honestly didn’t use it that much but we probably should have. I think that it’s somewhat helpful. But some of it’s going to be specific to what your payments look like and how you’re going to work things, especially working the exception which is all you’re doing. You’re working the exceptions so your way of working the exceptions is very specific to your business. So you didn’t get a remit. What are you going to do? You’re going to either reach out to who it’s from. You’re going to reach out to that company and ask for the remit or you’re going to go to your shared drive and look for it. See if you’ve got it and just for some reason it didn’t get to HighRadius. Some of it is going to be things that aren’t just something from the training material, it’s going to be specific.

Audience Speaker:

Your super-user sounds a little bit like a system administrator. Is she more on the I.T. side or business?

Julie Weaver:

She’s actually our supervisor but she’s been designated as our HighRadius superuser because she understands the system in and out.

Audience Speaker:

And then how much is she going back and forth with I.T. or is it mostly just with HighRadius?

Julie Weaver:

It’s both. Sometimes it is our I.T, either the file that went to our H.R, file that went over was this junk or sometimes it is HighRadius. We go in and everything is unmatched. So then we’re putting in a ticket. Why is everything unmatched? What is the problem?

Audience Speaker:

It sounds like most of the time your internal I.T is just with the integration side. Is that fair?

Julie Weaver:

That’s fair. Yes, it didn’t take a huge amount of I.T. for us. It is on the integration side. We get our bank file and we send it to HighRadius . I think that the bank wallet could go directly to HighRadius. So we’re getting that bank file and we’re sending it to HighRadius. We’re getting that A/R file and we’re sending that to HighRadius. So it is just getting the transmissions going.

Audience Speaker:

You had mentioned that sometimes your files go in the junk. So once it’s in the system in HighRadius do you have to manipulate it or can it be either resubmitted and then used instead of managing the junk?

Julie Weaver:

You can ask them to reprocess it. You can send in an additional file.

Audience Speaker:

When did you guys start the implementation?

Julie Weaver:

We did our first about two and a half years ago and then we waited for about six months to do the rest.

Audience Speaker:

How many admins do you have for your system, as far as the HighRadius system goes?

Julie Weaver:

Well, we have one superuser but there’s three of us that have ticketing rights in the ticketing system. That’s a nice thing about HighRadius too. You can give people the right to do certain things so you can segment it however you want. Now to add a new user we put in a ticket so we don’t have an admin that sets up user sets of privileges and things like that. We put in a ticket to HighRadius to do any of that.

Audience Speaker:

Hi. So when you say that you just went ahead with two accounts then gradually shifted to other accounts so you had two accounts implemented in HighRadius while the rest actually kept doing the manual way?

Julie Weaver:

Right.

Audience Speaker:

And you feel that gave better results?

Julie Weaver:

I feel that’s better because we were able to ease into it so we were able to put those two accounts in. We were able to get people comfortable with managing those accounts in HighRadius and seeing how they worked and working out any bugs before we put more in.

Audience Speaker:

And you did mention the logins. So these are EIPP logins?

Julie Weaver:

These are logins into the HighRadius system. So all of our coordinators log in every day. All of our analysts log in.

Audience Speaker:

On the customer side?

Julie Weaver:

There are logins for pulling remittances out of a portal. So there’s a couple of different kinds of logins.

Audience Speaker:

You talked about 95 percent accuracy. So was this like a gradual goal that was achieved?

Julie Weaver:

Once we went live, we achieved over 90 percent in testing. So it was working from the very beginning.

Audience Speaker:

Oh, that’s awesome.

Julie Weaver:

Now we have gone back and refined. So for some customers, especially for us, because we’re getting some payments that are the same amount on the same day. And so there were some mismatches because of that or some no remittance found cases because they would match the first one and then not know what to do with the others. So we have gone back and refined and added some extra criteria to our rules so that the matching is more accurate.

Audience Speaker:

What were the other criteria that were added?

Julie Weaver:

So we had the check number, we had a payee number. Well, I think one of them didn’t have a check number. So I think that’s what it was. A check number was added to our State Farm. It was just matching the dollar amount to the remit and we didn’t have the check number or EFT number. So we added that to make it more accurate.

Audience Speaker:

Was there validation on bank files?

Julie Weaver:

We don’t get any kind of validation on the bank file. However, if you go into the HighRadius tool and it’s not all there, they can’t process it. So everything will turn up as an error.

Audience Speaker:

So is it looking for a bank account number or a routing number?

Julie Weaver:

It’s not looking for a bank account number. It’s going and getting the bank file. It’s looking for that customer in the bank file. So on the bank file, they know what customer it is, and they will say it is from State Farm for an ACH payment or from progressive on the ACH payment. So that’s how they know which customer it is.

Audience Speaker:

If you get the same duplicate files, does it have any validation on the duplicate?

Julie Weaver:

I don’t know but I think there is a duplicate check. We haven’t had that issue at all.

Audience Speaker:

What was the turnaround time when the file would go and would get all matched up?

Julie Weaver:

So there are different priorities. So there’s high, medium and low. I think the three are high or critical meaning you can’t process that day. So you basically can’t work. And the turnaround has been very fast, it’s usually within a couple of hours. Sometimes even less, like 30 minutes.