From the November 2010 issue of Treasury & Risk magazine

Bronze AHA Winner in Cash Management

The National Railroad Passenger Corp. (Amtrak) reorganized a decentralized collections system in which 215 stations nationwide used local depository accounts, together with coin and currency services, ordered their own banking supplies, sometimes used armored couriers to pick up deposits or sometimes let the station manager drive to a local branch with the deposit. The result was 145 separate accounts at 35 different banks, along with haphazard and usually overpriced use of banking services, bank supplies and couriers.

So treasury sent out a national RFP to banks and selected just two, Wells Fargo/Wachovia and J.P. Morgan. It did the same with courier services and picked one, Garda, then selected Transource/Harland Clarke as its sole provider of bank supplies. Now all 215 stations make their deposits at one of those banks, all but 19 get scheduled armored car pick-ups, and every station gets bank supplies from the chosen provider. Rather than being charged erratic retail rates, Amtrak pays consistent, negotiated wholesale rates for banking, courier services and supplies for a savings of more than $500,000 a year, reports Jeff Carnicelli, assistant treasurer and senior director of treasury operations. It also eliminated the frequent overdrafts or excess idle funds that resulted from the uncertainty as to how much cash was being held in local depository accounts.

For each station, treasury weighed the time value of money against the cost of a courier pick-up to set the most cost-effective schedule. Garda operates virtual vault services in conjunction with the two banks, so the funds are available to Amtrak on the same day as the pick-ups. The 19 stations that operate at night or are too remote to be reached by armored car either mail in their deposits to one of the banks' check processing centers or make branch night deposits locally, Carnicelli explains.

A pilot program involving four stations ran into trouble with the delivery of coin and currency orders, as well as courier pick-up times. Amtrak tried a second pilot, liked the results, and rolled out the program to all stations. Predictably, station managers pushed back, but the station operations group was firmly behind treasury, and the station managers went along.

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