A few midsize pioneers, like Great Lakes Synergy, have always been on the leading edge of the paper-to-electronic revolution. They had visionary CFOs and treasurers who knew how to exploit nimbleness. But now a majority of middle-market companies are catching the wave. "They're asking how they can leverage technology to reduce banking fees," reports Danny Peltz, executive vice president of the wholesale Internet and treasury solutions group at Wells Fargo. "That's always top-of-mind. But they're also asking how they can make their people more efficient, and they are willing to pay higher fees when it produces greater savings."

There's no doubt–midsize treasuries are starting to more closely resemble large corporate treasuries, particularly given the pressures from increasing globalization. Leveraging the global economy forces formerly domestic middle-market companies into the world of cross-border payments, FX exposures and SWIFT messages, says Dan McCarty, senior vice president for treasury management services at Detroit-based Comerica. "These are brand new issues for many companies, and they are looking for global services from their banks."

They are also looking for more integrated solutions to fit in with more sophisticated technology. "Now, the middle-market companies are asking for integrated solutions," reports Dub Newman, global product management executive at Bank of America. "They want services that link to their ERP systems and create straight-through processing."

Admittedly, the A/P ingenuity at Great Lakes Synergy is special. Far more typical are the gains middle market treasuries are finding in remote deposit capture. To see how remote deposit is streamlining collections and A/R for even relatively unsophisticated treasuries, one need look no further than $228 million RAF Industries Inc., based in Jenkintown, Pa.

That cluster of more than a dozen independent S corporations with common ownership, ranging in size from $10 million to $150 million, has no treasury staff at all, reports CFO Kirk Hampson. Each entity has its own bank accounts, which used to mean local depository and checking accounts scattered across the country. Now, all accounts are at PNC Bank, regardless of geography. RAF uses a ZBA structure to sweep its individual PNC accounts into a PNC concentration account, where funds are used to pay down debt. It's efficient concentration without a treasury to make it happen. "Each company still has its own account and can log on and drill down to see detail, but I can see all the accounts at the corporate office and see that cash is used efficiently," Hampson says. "We don't try to run the companies, but we take advantage of master agreements for insurance and credit."

Even decentralized, RAF uses an array of tools usually associated with a staffed treasury function, including online balance reporting, funds transfers, ACH, account reconcilement, positive pay and lockbox, reports Regina M. Kelly, the PNC assistant vice president responsible for the RAF account. But remote deposit is having the biggest impact. Even business operations located close to a PNC branch find it more efficient to scan and transmit incoming checks for deposit instead of going to a branch, Hampson notes.

No doubt, remote deposit has been a middle-market home run. These days treasurers often cut short the sales presentation and sign up for remote deposit once they see how easy to use the service is and how much money it will save them, reports Comerica's McCarty. "We went quickly to $1 billion in remote deposits when we offered the product, and that climbed to $2 billion in the next year," he says, and most of that is coming from the middle market. By eliminating multiple accounts and depositing everything directly into the concentration account, a treasury manager can see a cash position at a glance and truncate the whole concentration process. "You can do it all from your office whenever it's convenient," McCarty explains. "Instead of taking a stack of checks to a bank, you scan them and push a button. [And] concentration is finished." While remote deposit is a middle-market hit, many smaller companies are testing it rather than going to full rollout, given the cost of equipment, training and the complexity or reengineering deposit processes, reports Matt Cammon from Cleveland-based KeyBank. Still, he notes the interest in the line of products is rapidly growing.

Remote deposit is not just getting checks deposited faster; it's changing relationships as well. Comerica had a credit client outside its geographic footprint but couldn't get the depository business until remote deposit came along, McCarty recounts. "Now that middle-market client has all its accounts, checking and depository, under one umbrella and can log on and see at once their aggregate balance and what location deposited or disbursed what amount," he notes.

Great Lakes Synergy jumped on the remote deposit bandwagon early, Bravo reports. "It was a no-brainer, even though we do get paid in hard cash sometimes and still have to take that to the bank," she says. "I'd say we've picked up at least a day and probably two of improved availability from remote check deposits."

On the A/R side, Great Lakes Synergy has used remote deposit effectively to streamline the processing of checks that don't hit the lockbox, Bravo explains. "We basically replicate the lockbox process in our locations," she says. "When one of our offices gets a check, they deposit it remotely and then enter the same information that the lockbox would capture into our cash application worksheet. It applies automatically to the open receivable with the same hit rate [as] the lockbox transmission."

Lockbox remains the preferred collection portal at Great Lakes Synergy. Besides using remote deposit for checks that miss the lockbox, treasury has created a spreadsheet to record incoming payments from credit or purchasing card transactions and uploads those transactions for automatic posting. Bravo's treasury also uses Winchax to accept faxed checks from chronic late-payers and expects to add an online payment feature to its Web site so that high-maintenance customers can log on, see invoices and authorize payment via ACH debit instead of faxing or overnighting checks, Bravo explains. "That will bring us a huge payoff," she enthuses. "And they'll have to provide the amount paid per invoice to allow for an upload similar to the lockbox information, so that those payments also post automatically."

Still presenting challenges are the wires and ACH payments from larger customers–and how to bring them into the automatic posting process. "We're trying to apply one processing logic to multiple streams of incoming payments," she explains.

The revolution in middle-market treasury operations is driving changes in banks, and not just traditional middle-market specialists like Key and Comerica. "Even the very large banks see the middle market as attractive and are scaling back solutions to make them affordable and easy to use for midsize companies," RAF's Hampson says.

Banks are also introducing new products specifically for the middle market. Wells Fargo, for example, is now piloting a treasury workstation to supplement its Commercial Electronic Office (CEO) platform that will span all of a company's business activity with Wells Fargo, including debt and brokerage modules. It may include multi-bank reporting, Peltz says, and allow uploads of data from any source into the workstation, which will include customized GL codes so transactions will post automatically to the right GL account. "We don't want to manufacture traditional treasury workstation software and deal with installations and client-site upgrades, but the new technology has made it attractive again for banks to offer workstations," he explains.

In spite of a marketing push by the treasury workstation providers to penetrate the middle-market with ASP-hosted versions, the middle market remains a haven for spreadsheets. LaSalle Bank was a Midwestern middle-market specialist before its acquisition by Bank of America, and it launched two technology platforms for its clients: a simplified treasury workstation and a pumped-up spreadsheet it calls CashPro Accelerate. The spreadsheet won hands-down, reports Cindy Murray, a LaSalle veteran and now product innovation and development executive at BofA. "Middle-market treasuries predominantly prefer spreadsheets," she observes.

Even hosted, a workstation required IT support to get all the relevant systems uploading and downloading properly, she explains. The spreadsheet is customized so that relevant fields populate automatically. For data from systems that are not linked to the spreadsheet, fields can be populated by manual entry, she adds. CashPro Accelerate can provide multibank reporting. BofA is sufficiently impressed with the takeoff–40 customers in the first year–to move forward on offering the product to its other middle-market customers, she reports.

A lot of middle-market companies use one primary bank and get all they need through that bank's Web portal, Peltz reports. Others will never want to depend on a single bank. "But they're shrinking relationships from four or five to just two," he notes.