From the March 2012 issue of Treasury & Risk magazine

Advanced Matchmaking

Lockboxes put technology to work to link more payments to the right invoices.

Treasuries continue to advance their collection strategies and streamline collection processing, less by relying on technology breakthroughs than by leveraging existing tools. For example, at $8 billion Henry Schein, a medical supplies distributor in Melville, N.Y., the goal is to buck the trend toward customers’ paying with cards, encourage ACH debits, process check payments as efficiently as possible and live with the realities of the marketplace.

Overall, about 50% of payments arrive by check, 40% pay by card and the rest with wires and ACH, reports Timothy Ingoglia, credit director for corporate accounts at Henry Schein.  Card payments are “the most expensive form of payment we receive,” notes Ingoglia. But a growing number of customers favors them, he adds.

Whether it’s done in-house or at a bank, the leading edge of automated wholesale lockbox operations is straight-through reconciliation that uses intelligent character recognition (ICR) to capture data and artificial intelligence to match payments to open receivables up to 95% of the time, says Rodney Gardner, head of global receivables at Bank of America Merrill Lynch.

Give your bank access to your A/R system, Gardner advises, and let the bank’s system figure out what your customer is paying for, even when there is no perfect match such as a list of invoice numbers being paid in full by the check.

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