The treasury and accounts receivable groups at Kellogg, the $12.4 billion maker of cereal and convenience foods, were bogged down in paper, ranging from billing statements and foreign exchange confirmations to account analysis statements. As part of a company-wide Go Green initiative, treasury and AR worked together to eliminate as much paper as possible, and in the process have managed to save the company close to half a million dollars.
The amount of paper involved was staggering, like the 9,000 pages of bank account statements that arrived each month, each of which was copied four times so that reconcilers, reviewers and approvers had their own copies.
Treasury and AR consulted with banking partner J.P. Morgan on how best to proceed and decided to implement the bank’s Receivables Edge and Access. The online tools allow Kellogg to receive bank statements, FX confirmations, billing statements and invoices electronically and merge the data into a single repository. Staffers who need access get user IDs and passwords that let them work online.
Under the old system, timeliness was another issue. Accounting requires the general ledger to be reconciled to bank statements within three days after the end of a period, but often the statements didn’t arrive in time. Under the new system, “the period ended Friday, our statement was on my BlackBerry by Saturday,” says Deirdre Stokes, manager of corporate treasury at Kellogg.
Stokes says the biggest challenge was changing people’s mindsets “toward moving away from a culture where you have a physical copy of a document to an electronic version.”
There were also security concerns about putting financial information online, but treasury and AR “worked through those issues with IT, making sure the data was encrypted and secure from being hacked into,” she says.
Kellogg eliminated the need to print 36,000 pages a month. It has also cut costs on everything from fees for armored carriers and overnight couriers to payroll, as AR went from eight full-time employees and six contractors down to five full-time workers and no contractors, resulting in a savings of $218,460 a year just on payroll costs.