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Key lessons in moving from cheque disbursements to card and ACH

The presentation by Julie Mingus Director of Corporate Treasury Operations and Disbursements, Dean Foods Company and Steve Tinker, SVP, Wells Fargo at AFP's Annual 2011 Conference entitled 'The incredible supplier payments conversion success story of Dean Foods Company' provided important lessons in how to improve efficiency, accuracy and control in supplier payments, and capture early-payment discounts:

  • set yourself key goals to: receive the majority of invoices electronically, reduce invoice volume by using P-Card, improve Day Payables Oustanding and move suppliers from checks to ACH payments
  • one of the easiest ways to move to receiving invoices electronically is to ask suppliers to email invoices in TIFF format and scan them on the day received
  • 'scrub' your supplier database to remove inactive entries
  • engage the customers and end users in redesign of the process
  • when moving suppliers to ACH payments ensure that they are carefully informed and fully briefed
  • good practices are needed internally as well, including: communicating with all internal business partners clearly, early and often; engaging IT early and including in all discussions.

This conversion programme: converted 80% of the 50k+ suppliers in 3.5 months; decreased postage and shipping costs by $65k; reduced payment-status enquiries to the accounts payables department by 30% and the A/P budget by 50%; improved DPO by eight days unlocking $22m working capital; and captured $2m+ of early pay discounts in 2011.

 The very latest technology is mostly not needed in disbursement, just focusing on the basics in paying suppliers produces significant savings.

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