One key treasury initiative that helped save Allstate Insurance Co. $15 million so far was converting three of the paper-based payments options to electronic payments: checks that arrive by mail in Allstate's in-house lockboxes, and check-by-phone and check-by-Web payment channels. Together they comprise over 35% of Allstate's incoming payments.
While Allstate's lockboxes are completely ARC-enabled, only about 78% of the payments are eligible for ARCing. Checks over $25,000 and checks that are not accompanied by payment coupons cannot be converted, explains Zelma Echols, treasury manager. Still, Allstate has been able to increase its use of the ACH beyond the ARC conversions by promoting direct debit authorizations and online electronic billing and payment Web sites.
ACH is by far the least expensive way to process payments and overall Allstate transactions have grown by more than 301%, she says. "Since 2004, we have cut our overall per-item processing cost by two cents and that comes in the face of double-digit growth in credit card payments, where the average cost is $3.69 per item," she says. Besides saving money on payment processing, the company picked up a full day of float on the funds.
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