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PayStream Advisors delivers unbiased, third-party market trend information, assessments of financial automation technology, and innovative ideas to business leaders in healthcare, consumer billing, finance and treasury, accounts receivable and accounts payable.

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Case Study: ALLTEL | Accounts Receivables Process Analysis

Company: ALLTEL

Implementation: PayStream’s Payments Optimizer™

Industry: Telecommunications

Company size: $8 billion, ranked 265 in the Fortune 500

Proliferation of payment options has not transformed the overall mix of paper vs. electronic payments

The problem

• A/R costs grew rapidly when new payment options were introduced
• Induce customers to use new recurring, electronic payment channels
• Improve customer satisfaction while lowering payment process costs
• Reduce Days Sales Outstanding (DSO)
• Increase automation ROI
  

The solution

• Conduct an automation assessment of accounts receivable process
• Document organizational metrics vs. industry standards
• Employ PayStream’s methodology and benchmarking data
• Exploit PayStream’s library of best practices across the industries
• Apply PayStream’s Payment Process

The benefits

• Streamline vendor vetting process and timeline
• Slash Days Sales Outstanding (DSO)
• Improve financial flexibility with released working capital
• Enhance customer satisfaction with a Web-based environment
• Reduce A/R workload through self-service presentment and payables process

Translating a Payment Option Strategy into Real Savings:
Driving Customers to Low Cost Channels without Driving Them Away

PayStream was asked by ALLTEL, an $8 billion company (# 265 in the Fortune 500) operating in 26 states as a wireless, local, long-distance, and Internet provider, for advice regarding its remittance and payment practices. ALLTEL’s A/R costs grew rapidly as they introduced payment convenience options into their customer billing mix. The challenge was to improve customer satisfaction while transitioning customers to lower cost payment channels.

A PayStream Advisors team visited ALLTEL headquarters to gather information for analysis using PayStream’s Payments Optimizer methodology, its library of best practices and its benchmarking data before making recommendations in the form of an implementation road map.

“PayStream brought us industry and market research we couldn’t find elsewhere. Thanks to them, ALLTEL is now experiencing a painless transition to lower costs and higher customer satisfaction.” - John Doe, ALLTEL CF

ALLTEL wanted to provide maximum convenience to its customers in hopes it would lead to fewer Days Sales Outstanding (DSO), lower processing costs and higher customer satisfaction. — Good intentions, but there is a road paved with good intentions. — To that end, ALLTEL readily accepted payments through any channel, in any form the customer offered first. Often this meant payments made by credit/debit card during a conversation with in-store or call center personnel; the most expensive forms of payment made to the two most expensive customer touch points. In the absence of directions, training or incentives to do otherwise, nobody gave this practice a second thought.

What PayStream Advisors found is that ALLTEL has state-of-the-art back-office processing technology. Their cash applications are highly automated leading to a low amount of manual processing, and their aggressive use of ARC and RCK dramatically reduces return item processing and associated collection costs. These factors, coupled with a genuine commitment to customer service (evident through their generous array of payment options) and a corporate culture that promotes continuous improvement, created a climate at ALLTEL conducive to change; for the better.

PayStream’s benchmarking data revealed ALLTEL’s labor costs and credit card fees were disproportionably high compared to industry standards. Further, these variable costs were subject to increase over time. The baseline fully loaded costs for ALLTEL to accept payments across all channels was projected to rise an unsustainable 27% within three years. To counter this upward trajectory ALLTEL would need to make subtle changes to its payment options mix. PayStream’s recommendations included training and incentives to direct customers to underutilized payment alternatives; kiosks, enhanced IVR, easy ACH enrollment via Web site and call center and parsing debit card transactions from credit card transactions. While credit and debit cards made up 10% of ALLTEL’s payment volume, they represented nearly 40% of the total cost to process payments. PayStream identified that the card change alone would save ALLTEL roughly 10% of their cost of processing payments.

Based on the addressable variable cost opportunities identified through the PayStream study, ALLTEL will achieve significant net expense reduction/additional fee income through 2007, reduce DSO, and with customer incentives increase overall customer satisfaction.

We are in a unique position to assist corporations with automation projects. Our clients benefit from our experience as an industry insider, and gain from our ability to create apples-to-apples comparisons of different technologies, approaches, and implementations. PayStream Advisors acts as a fine-tooth comb to filter through requirements, specifications, and vendor responses, and can negotiate a more comprehensive arrangement than is possible through a bid or RFP process.

Want to Learn More? See PayStream's extensive library of Accounts Payable Automation Research

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