Led by concerted efforts on the accounts payable side, projects to convert check payments to ACH are starting to produce real benefits. When $12 billion Dean Foods decided to streamline vendor payments in late 2009, the Dallas, Texas-based company had the foundation for an impressive turnaround—a bloated vendor base of nearly 200,000, roughly 100 employees tied up handling invoices and check payments, only 7% of 52,000 monthly invoices arriving electronically, and 80% of supplier payments going out as checks, requiring a daily check run of up to 5,000. Days payable outstanding (DPO) stood at 19 days.

Now the vendor base is a svelte 60,000. There is only a limited check run because 86% of supplier invoices are now paid by ACH. Settling an invoice with a check is the rare exception, reports Julie Mingus, director of corporate treasury operations and disbursements. About 50 employees now handle invoices and payments, and all but 24% of invoices arrive electronically after a three-stage campaign to get suppliers to e-mail their invoices in TIFF format. 

Experts consider such a high conversion rate essentially impossible, but Dean Foods could do it because it had multiple suppliers for almost everything it bought. As the company shrunk its supplier base, in most cases only those that would agree to card or ACH payments survived. "If a supplier wouldn't take ACH payment, we'd go to the next one on the list," Mingus says.