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."

According to Craig Brown, director of finance and analysis at HealthTrans, "our biggest saving came from the lockbox and outsourcing collections. That saved us 6,500 man-hours annually."