While closing local bank accounts and saving $400,000 a year in fees was a clear win, it did pose some challenges for treasury because recreational properties sometimes need or build up cash. Massey solved the currency shortage problem by turning on the cash advance feature of the company's purchasing cards. Cardholders can now use their cards to get currency. There's a fee of more than 1% on cash advances, but currency needs are modest and that fee is chump change compared to the savings, he points out.

The solution took about a year to get up and running. It's relatively cheap (scanners run between $300 and $3,500); relatively painless (there were a few scanner bugs initially); and even relatively popular. "While many of our accountants resist change," Massey notes, "I've received quite a few unsolicited e-mails telling me how much easier remote deposit has made their jobs."

Automating accounts receivable has often thwarted treasurers with its many moving parts–bank rules and capabilities, customer predilections, accounting systems and the potential intransigence of all three groups. But many treasurers like Massey are making substantial progress toward a seamless system, thanks to a family of new A/R tools, such as remote deposit, and a growing recognition of the importance of A/R automation on the part of both treasury and finance staffs and the banks, which now often are as instrumental as software in eliminating steps in the order-to-cash process. "The more you automate, the better you can manage your credit lines and ultimately increase sales," observes Daniel Rosenstein, managing director and head of U.S. cash management, corporate sales, for Deutsche Bank's global transaction banking business.

In the pursuit of best practices and world-class performance, companies can and should apply metrics, Rosenstein insists. "To improve a process, measure it," he declares. That's why specialized A/R groups, sometimes working within a shared service center, are likely to excel–because they measure, benchmark and press for best practices. "The better you can document the benefits of best practices, the easier it is to get funding," he adds.

MEASURING UP

Average companies have a DSO of 46 days, while world-class companies get it down to 33 days. For a $10 billion company, that DSO reduction means $35.8 million a year in bottom-line savings, estimates The Hackett Group, an Atlanta unit of AnswerThink Inc. that specializes in business process consulting and benchmarking. One of the best metrics for measuring A/R effectiveness is the percentage of credit sales collected within terms, says Katie Downs, who runs Hackett's invoice-to-cash benchmarking and advisory programs. "World-class companies hit 90%. The best ones get it as high as 92%," she reports. Terms reflect market realities. A world-class company may offer 10-day terms; it may offer 100-day terms. According to Downs, the more accounts that get paid within the terms set the better the process.

Billing error rates is another revealing metric. "World-class companies have error rates under 1%," Downs reports. "That's because they track down the root cause of every error and find ways to prevent such errors from occurring again." Hackett benchmarking studies show that average companies have customer billing error rates of 4%.

The key is to realize that world-class A/R provides opportunities and not just challenges. Downs recalls a corporate client that decided to use the occasion of a new product introduction to increase market share, using innovative A/R. In fact, with the product's introduction, sales shot up 118%, but the company had to have policies and practices in place that would allow customers to maximize their orders. That meant increasing credit limits without increasing the seller's credit risk. The Hackett client segmented its customers by their capacity to buy and started communicating with them before the product was rolled out. As a result of this collaborative search for a win-win solution, the company was able to combine that 118% increase in sales with a 12-day reduction in DSO. "They found ways to reduce their A/R so that they could liberate cash and accept large orders with acceptable credit risk," she says. "They got best-of-breed software from GetPaid. They put in place procedures to resolve disputes quickly. They automated workflow and approvals. They made sure they were ready to exploit this unique opportunity."

Because the product was desirable, customers were willing to cooperate to be able to buy more of it. Invoices and payments were consolidated, bringing a reduction in lockbox activity, Downs reports.

And consolidation of banking services is definitely one of the significant benefits companies can realize and one of the factors motivating banks to gain a competitive advantage by working on ways to automate processes like accounts receivable that in the past did not traditionally involve them directly. "When you deal with only one bank for all your collection activities, which is now possible in some cases, and receive only one data file, there are tremendous efficiencies," observes Veronica Correa Janssen, director of product management at Cleveland-based KeyBank. "The whole concentration apparatus goes away. It's amazing how quickly opportunities are opening up.

"Of course, all this progress on the collecting side creates temporary headaches and reconciliation nightmares on the disbursing side," KeyBank's Janssen concedes, "but it won't be long before providers find ways to cause disbursing platforms to converge and bring all disbursements to a single platform for reconciliation and fraud protection."

Companies are striving for a degree of centralization internally as well to eliminate redundancies and improve efficiencies. Buffalo, N.Y.-based Gibraltar Industries Inc. is a sprawling $1.2 billion enterprise comprised of more than 25 different companies, with 19 different operating systems that reflect 27 acquisitions since 1993. While Gibraltar might seem like a logical candidate for an enterprise-wide ERP system to bring together its plethora of systems, Dave McCartney, Gibraltar's CIO and a corporate vice president, says the company will instead try for the best of centralization and decentralization. In A/R, that means keeping its legacy systems, some of which date back to the 1980s, but installing Aceva A/R tools to provide 2006 functionality and a single view of its positions. Gibraltar expects to have the software up and running at a few locations before September and finish the rollout by mid-2007. "We'll never get to a single system," McCartney concedes, "but that doesn't mean we can't create powerful leverage points that give us a single view across a decentralized enterprise. It will give us a perfect alignment of our IT infrastructure with our business model."

Aceva will interface with the various A/R systems and create a consolidated database and reporting structure, McCartney explains. And it will do so without disrupting business operations at the subsidiaries, which have lean staffs and not much capacity to absorb disruption.

The new overlay will solve the problem of separate subsidiaries making separate credit decisions about common customers, sometimes increasing the total credit exposure of Gibraltar beyond intended levels. Credit decisions will still be made locally, just with more visibility and following clearer corporate credit policies, McCartney explains. "With better visibility, we will collect more proactively, get in front of situations before they deteriorate and have less bad debt," he predicts. "The projected payback on this project is very aggressive. We expect to recover our costs quickly."