Automating Receivables with KeyTotal AR® How Makino Addressed Its Cash Application Pain Points
Like many businesses, Makino wanted to increase efficiency in its accounts receivables process and accelerate cash flow. Following a comprehensive search of alternatives, the company found a solution that was a perfect fit with its needs: KeyBank’s Receivables Solution, KeyTotal AR,® powered by Billtrust.®
The automation opportunity
Working out of Makino Inc.’s headquarters in Mason, Ohio, Tricia Ethier, Senior Treasurer, CTP,® FP&A, and Six Sigma Green Belt, is responsible for treasury management for the corporation’s business in the Western Hemisphere. A major part of her job involves identifying opportunities to enhance cash flow, which led her to take a hard look at her company’s receivables function.
“Makino’s cash application process was not automated, and our staff had to manually post each payment made by customers, which was time-consuming and inefficient,” said Tricia. “The process in place caused us to post payments to SAP a day after transactions occurred when we saw them hit our bank accounts. As a result, we did not have valid posting data on the date of posting.”
Makino’s treasury and credit teams were also handicapped by the lack of a readily accessible document archive. “We were saving PDFs and reports to the server, which was not easily searchable,” Tricia recounted. “This was especially problematic when resolving issues on deductions. To illustrate, if our invoice said $100 and the customer paid $90 after making a deduction for freight or discounts, we wouldn’t have a match between the invoice and payment. And we didn’t have the ability to quickly run a report or access files to find the discrepancy. If the invoice and payment didn’t match, we had to call or email our customers to reconcile. We always matched, but it took time and resources to get there. Until we could dedicate resources to resolve a discrepancy, the invoice wasn’t cleared.”
Tricia was tasked with creating a process to revamp the cash application process. After documenting the entire process and identifying shortcomings, she asked herself one big question: How do we automate this?
The search for a solution
Tricia placed a call to Kathy Winters, Senior Vice President and Senior Payments Advisor at KeyBank. “I talked with Kathy about our challenges and interest in finding an automated cash application solution,” Tricia recounted. “That’s when she told me about KeyTotal AR, a new accounts receivable platform that was available as a result of a strategic relationship between KeyBank and Billtrust.”
KeyBank connected with Billtrust in 2017 to build upon Key’s core treasury platform. The goal was to improve operational efficiency for corporate clients during the invoice-to-cash process using a flexible, cloud-based solution.
Using Billtrust’s Quantum Payment Cycle Management, KeyTotal AR delivers a flexible, cloud-based solution to meet a company’s specific accounts receivable needs. KeyTotal AR provides the flexibility and visibility clients demand along with the ability to integrate with more than 100 Enterprise Resource Planning (ERP) systems to make implementation simple. As a result, KeyTotal AR enables corporate clients to streamline their receivables processes, resulting in reduced costs, accelerated cash flow, and enhanced transparency.
Choosing KeyTotal AR
“We conducted a thorough review of alternative automated accounts receivable providers to ensure that we found the best possible candidate for our requirements,” Tricia said. “As we completed our due diligence, we saw the power of the KeyTotal AR platform and the flexibility that Key and Billtrust offer. Trust was an important factor for Makino in selecting KeyTotal AR. We knew Key’s values. And if Key had decided to establish a relationship with Billtrust, that meant a lot to us.”
Focusing on pain points to gain approval
Once the due diligence had been completed and KeyTotal AR was selected, the next step was to get executive management’s approval to move forward.
“Our approach was straightforward: We focused on our pain points and how KeyTotal AR would address them,” Tricia said. “The delays in posting were adversely impacting receivables aging and cash forecasting. Until we knew the cash was in the bank, reporting would be distorted. We had no easily accessed resource to help us sort out problems with invoice and payment matching, and adding to staff was not an option. We positioned the investment in transitioning to KeyTotal AR as a one-time fixed cost that would give us an automated solution and enable us to avoid incremental and permanent staff increases.”
Tricia noted that there was another factor in gaining approval. “Makino has a long tradition of delivering game-changing technology innovations that can revolutionize each client’s competitive edge,” she added. “Given our forward-looking strategy and focus on digitization, Key’s automated receivables platform was a great match for us.”
“The gains we’ve made with KeyTotal AR have been nothing short of amazing,” said Tricia. “We’re achieving a 75-80% daily match of invoices and payments. We’ve gained a day in posting to SAP, since we’re now able to post a payment on the day of the transaction rather than waiting to see if it hit the bank statement. Because the system recognizes deductions for freight, taxes, and discounts, our staff can quickly access reports to reconcile and do any follow-up that’s necessary. In terms of staffing costs associated with cash application, we anticipate a savings of eight full-time equivalent (FTE) hours/day.”
Makino’s visibility into AR has been greatly enhanced. “We get fabulous real-time information from KeyTotal AR,” Tricia explained. “And we’ve made great strides in our ability to research and analyze payments. We decided to archive detailed records for seven years, which means we can look at any transaction over that time period on our dashboard to get step-by-step detail on the entire transaction flow.”
Tricia fully expects to see a marked improvement in receivables aging following the installation of KeyTotal AR. “Anecdotally, we already know that we’re in a better position,” she remarked. “By the end of our FY second quarter, we’ll be able to compare receivables aging pre- and post-transition.”
Ease of working with Key
“The integration of KeyTotal AR powered by BillTrust with our processes went very smoothly, and the ongoing work relationship is great,” said Tricia. “It’s usually not very easy to work with a third party through another relationship, but that’s not the case with KeyTotal AR. We have a centralized email channel to ensure that all the right people from KeyBank, Billtrust, and Makino are in the loop. And Billtrust is incredibly responsive to our questions.”
Tricia also noted that Billtrust provides excellent training videos. “We watched the videos up front, which gave us a good feel for what Billtrust could do for us,” she remarked. “In fact, if I had it to do over again, I’d have our staff revisit the training materials as questions came up once we were up and running. We found that most of our issues had already been addressed in the videos, but the information just hadn’t stuck. That said, Billtrust answered all our questions and helped us work through every issue.”
Advice for companies seeking to automate AR
When asked about the most important factor in successfully automating receivables, Tricia has a quick one-word response: “Teamwork,” she volunteered. “Pull in all of the stakeholders, whether they have decision-making roles or not, and make sure that the key players remain fully engaged before, during, and after implementation. It’s also essential that everyone knows what the system can and cannot do.”
In addition, she emphasized the importance of ensuring that the project is fully resourced, including access to programmers, and that sufficient time is allocated for testing. Tricia also underscored the value of creating and presenting a strong argument for gaining executive buy-in for AR automation. “As I mentioned earlier, to gain approval, we focused on very tangible pain points and how automation would directly address these,” she said. “That’s what worked for us.”
Implementing AR automation opens the opportunity for a company to benefit from future digitization initiatives. “We can leverage our success in automating the cash application workflow with KeyTotal AR to gain even more efficiencies down the road,” Tricia remarked. “It can also provide the impetus for us to examine our entire billing process to take advantage of automated solutions.”
For more information, visit us at key.com/AR.