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Making the Most of the Middle

HealthTrans, Little Caesar and Western Container, like many middle-market companies, use a blend of ingenuity and enhanced traditional cash management techniques to preserve liquidity, cut costs, conserve working capital and prevent losses.

By Richard Gamble | Updated on January 30, 2009

Sophisticated treasuries often boast about their success in getting out of the check world, but just because a middle-market company stays fixed in that paper orbit doesn’t mean it can’t streamline, automate and leverage scant treasury resources effectively. HealthTrans, the $250 million Denver-based pharmacy benefit manager pays almost exclusively by check, generating about 6,000 a month, largely to pharmacies. On the inbound side, it collects 7,000 to 8,000 check payments a month in its paper-intensive lines of business, reports Chris Hanks, COO/CFO. But Hanks and his staff see very few of those checks anymore. The payments are outsourced to KeyBank. “We are able to deal with high payment volumes and keep a lean staff by using Key’s check outsourcing service, which we implemented in 2006,” Hanks says. “Rather than run a manual operation or build the automation in-house, we just create the A/P data file and send it to Key through their treasury management Web site. They create a positive pay file, load our check run data into their system and send the file to a check printer they use. The check printer prints and mails the checks and stubs.”

HealthTrans wanted an efficient, automated payment solution without giving up checks partly for financial reasons: “With $20 million a month in check payments, getting that mail time matters to us. Our strategy is float-driven,” Hank says.Hanks rarely sees incoming check payments as well because they mostly go to a lockbox operated in Denver by Vectra Bank, a Zions Bank affiliate. Vectra opens the mail, scans the checks and remittance documents, deposits the checks and sends HealthTrans a file of remittance data that has been formatted so that it can load into HealthTrans’ A/R system and post automatically most of the time. HealthTrans gets an automatic posting hit rate of about 80%, he estimates. “We only work with the exceptions.”

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