86% Straight-Through Processing for Checks: Automation Success Story of Lhoist


James Robinson

Lhoist North America

Alicia Geades

Sr Credit Manager,
Lhoist North America

Bernardo Aguilar

AP/AR Manager,
Lhoist North America


[0:00] Anchor:

Good morning everyone. How are you doing today? Did you guys join us for the party last night?

[0:06] Anchor:

Yeah, we got a full day of activity so let’s get started. I do have a little joke for you guys in case you’re not feeling the energy after last night.

[0:27] Anchor:

So with us today we have Lhoist.

[0:32] Anchor:

So we have James, the treasurer joining us today. We have Alicia, their credit manager, and Bernardo, the AP and AR manager.

[0:43] James Robinson:

Hey, good morning.

[1:03] James Robinson:

I’m James Robinson, I work with Lhoist North America. A little bit about Lhoist. It’s a 130-year-old company, family-owned out of Belgium. So, about 2.2 billion euros a year in revenue, so not a huge company. But you know, Fintech is for everybody. So even if you’re not huge in a fortune 500 company, there are opportunities out there. So, we manufacture lime, which is mining limestone, and then signing it or burning it to make chemical lines, which is calcium oxide. So not a complicated process, but still an important one. It goes into your life every day. So it’s used in power plant, emissions remediation used in soil stabilization. It’s used in making steel. So you touch it every day, you would never know it. So, any case, based out of Belgium, our headquarters are in Fort Worth, Texas, the North American operations that we are responsible for, or a little bit over a third of the business so substantial part of the business here in the US. So we’re here to talk about cash applications today.

[2:31] James Robinson:

As you know, cash application typically is a lower-level job. It’s not a job that anybody wants. You don’t typically hire high talent or high promote ability people there, it’s an oddity anyway. So, just not someplace that I think you get a lot of quality talent from. So it ends up being very mundane and the people get stuck there. So, you know from a talent retention and the task part is prime for automation and it really impacts. So, as far as talent goes, again mundane, it’s not someplace somebody wants to spend her career. The financial impact is real.

[3:31] James Robinson:

We had three FTEs like say, we’re not a huge company but still, there’s an opportunity to improve that and also high costs. So we had bank fees that we were paying keying fees, every transaction had someone keying in on the bank side, which is expensive. And then the poor customer experience. So you get a customer remittance, they’ve paid, they don’t want to hear from you again, they’ve done everything they’re supposed to do. So we were always following up with the customer and it just wasn’t a very good customer experience for them. So, prime for automation, and I’ll let Bernardo talk more about what we did there. So it said we had three FTEs before, whenever we started, including Bernardo, he was the supervisor of that team at that time. Cash is being applied very slowly. So we had 5 million unemployed cash. It took maybe a day and a half to process that day’s worth of material and remittances. So we were always behind 70% checks. So that meant keying fees for all those and we really had no incentive to push to get paid electronically because, for us, it was easier to chat. So thank you!

[5:10] Bernardo Aguilar:

Good morning! I’m Bernardo Aguilar. I’m currently the AP/AR manager. And it’s because of the automation, that I was able to leverage the extra time that I had to assume a new role. But if you’re here this morning, you’re probably looking at different options to automate your HR department or your cash applications department. And similarly, we did have roadblocks. That is not unique to Lhoist with regard to checks.

[5:41] Bernardo Aguilar:

You know, we were getting a high volume amount of checks. We also were getting a high check at the end-user, and if you’re working in the cash application department, we prefer to have a check, right? Because it means no manual process. And you don’t have to go back and apply it with the keying fees from the bank, it is just automatically applied to the system. We do operate out of SAP. But there was a high volume of checks and there are potential errors with keying banking information. We also experienced challenges related to each payment.

[6:31] Bernardo Aguilar:

So right now, I’m sure everyone here in the room is aware of the third party portals that we’re going to and logging in to obtain that information. The remittance information we were getting remittance information if any, via email, via fax or an Excel spreadsheet, whether it be you know the information to be attached to the email form. So as a supervisor managing that department, it was definitely a high touch. We were having a third party tracker, we had a spreadsheet that we would have to keep updated and right for the different portals that you would have to go in and login into. So yeah, it was just cumbersome for the end-user to operate or deal with electronic payments.

[7:31] Bernardo Aguilar:

Deduction coding. Luckily for Lhoist, we don’t experience high deduction as much as more manufacturing or distribution customers do. But we do have people who short pay tax or freight fuel surcharges. But we have pricing. So we didn’t have challenges to it, but not as much as a lot of people that we’ve talked to with regard to deduction coding. Nonetheless, we did take it, we decided to revamp the deduction coding at the time that the project was implemented. So it’s a good way to brush up the processes that you weren’t fully utilizing beforehand and make it better.

[8:22] Bernardo Aguilar:

So the implications of cash application-related challenges. What I just summarized, I think, for Lhoist specifically, and for my team, the bulk of the challenges were the number of E-payments or electronic payments and trying to track the information. You know, by whatever means, whether it be at their party portal, whether it be going through your email inbox to track down and match the remittance without payment. But ultimately, it did lead to poor customer experience. Nobody wants to be contacted after they made a payment, it doesn’t make us look professional as well. And another task for my team to do was find out about how to make it better.

[9:14] Bernardo Aguilar:

We hired HighRadius with regard to the implementation, we were able to eliminate 100% of the bank keying-in fees. Additionally, we were able to come up with algorithms and how during the blueprinting phase to align the missing remittance information with the payment. HighRadius is awesome, it has an RPA or bot that would go into the third party portals for you, obtain that information and magically align it with the incoming payment, therefore, reducing that need of my team of having to go to the third party to obtain that information, it is automatically done. We don’t even look at it. The only time that we do monitor is when we have to update the password.

[10:15] Bernardo Aguilar:

Deductions codes. Okay, so now with the implementation of the cash application automation tool, we were able to revamp our deduction coding, and now we have someone on the team dedicated to helping resolve deductions a lot quicker than before. And I think the fourth one is the big bang for you. Before we would have, as James already mentioned, a team of three people dedicated to applying cash. It would often take on a heavy day, you’ll take like a day and a half right to apply the cash, with some overtime.

[11:03] Bernardo Aguilar:

But now on a good day, I have one employee solely dedicated to applying cash. And on a good day, she’s done by noon, that she has other opportunities to help out within the organization. If you haven’t demoed the product itself, here are some slides, the screenshots of the actual product. The first one is kind of how I see the check that is captured right. So, the check image, all the information that is found on the actual check image is obtained/extracted and then put into the awesome HighRadius platform. additionally, with any kind of email correspondence that has remittance information, the tool will assign or link that email remittance into the payment itself. So again, eliminating high touch, repetitive work for the team.

[12:17] Bernardo Aguilar:

And this is a simple screenshot of the deductions coding that you went through and developed during the blueprinting phase. And it kind of shows you how the logic that you put in the hard work, that you put in during the blueprinting phase. It can help you immensely with the system in automatically identifying and assigning a reason code to that deduction.

[12:47] Bernardo Aguilar:

Now I’m going to hand it off to Alicia.

[12:49] Alicia Geades:

Hi there! Talking about some of our results. So, we saw a 67% increase in employee productivity as both James and Bernardo have mentioned, we went through from three FTEs to basically less than one. You could imagine all the things that Bernardo just described, manually logging into email looking for remittance advice, and then keying that into our ERP versus HighRadius, having access to our centralized email box where remittances go and being able to extract that and automatically match the payments.

[13:24] Alicia Geades:

The same thing with customer portals, the HighRadius product is able to pull that down and automatically match it. So all those things that we spent so much time on and which don’t add value, and certainly didn’t provide a warm fuzzy to the person that was doing cash. You can imagine how frustrating it would be to be searching for information all day long just to get that one check posted. So we’ve seen not only an increase in productivity but overall kind of increase in morale for that role. Also, we saw a 100% elimination of keying fees as James mentioned. So we do still have bank fees. We have image fees that we always had. So that image is still done by the bank and the file is sent over to HighRadius, and then it’s linked back into our system where we stored the image and SAP today. But the keying fees are gone. And then 86% hit rate for check payments. So that’s something that I think is higher than the average. And we’re really pleased with that.

[14:31] Alicia Geades:

We still do see some issues with handwritten checks. We have some customers in some regions that still sit and write a check. I know it’s hard to believe these days but it happens. But at this point in time, that’s pretty close to perfect for us, based on our customer portfolio, and then 80% hit rate in ACH payments. We still struggle somewhat with the customers not submitting remittance advice to us in a logical way. While HighRadius is able to pull all our customer’s master and order entry-level detail to try to match the payment with the rules that we’ve written.

[15:09] Alicia Geades:

Sometimes they just don’t provide the right number. So, we would like to see that 80% increase, but I mean, we’re pretty happy with that because as Bernardo said before, most electronic payments were a very manual process. So some lessons that we learned, the customer master data does need to be constantly updated. And so if you’re an SAP user, the alternate payer set up in the customer master is important for submitting when a customer sends a payment and needs to maybe cross two accounts in your system. We have seen as far as customer master goes, some developments over the past few years since we started using the products, for instance, we used to have to go in and key all the microdata so the payment could match with it. But now, HighRadius is able to store that data based on what they’ve extracted from the payment on their platform.

[16:07] Alicia Geades:

So it matches it where we have all of our exception handlings. And then once it goes over to SAP, it’s as perfect as it can get. Definitely, a lesson learned was that this low cash application process impacted our downstream processes. I’m in charge of the credit group. And it was extremely frustrating on multiple levels when the team would contact the customer and the customer would say, I already paid that and it wasn’t posted or it was posted incorrectly. Today, the posting is so quick that we do not have any of those kinds of problems. Now, we can easily identify the detection reason codes, and we have that check image right there at our fingertips.

[16:44] Alicia Geades:

So the job of the collector and that communication with the customer is more professional than it’s ever been before. And then we did a bill versus buy evaluation before we entered into this, and I’m sure a lot of people in the room feel the same way. But we have limited IT resources. And we tried to do these projects with experts. We admit we are not experts in our IT department and admit that they are not experts. So, you know, looking at cost, and there is a cost to buying, but there’s also a cost to building. And in a lot of times, at least in our organization, building a solution cannot be sustainable because as I said, we’re not the experts. So we have been very lucky to partner with HighRadius. Along the way, we had a great opportunity to like when we’re writing the rules, and blueprinting talks about how our customers behave, and how we can customize the solution for our needs. So do you have something to add?

[17:44] Bernardo Aguilar:

Yeah, on the build versus buy I would add that part of the sustainability pieces update. So if you have something new, you want to add some new functionality. You’d have to go back to your IT person every time, right? So being cloud-based solutions, HighRadius is thinking about the best ways to transact every day. It’s what they do. And we benefit from that through constant updates of the program on the platform. So it’s nice not to have to drill down into one specific task every day.

[18:28] Alicia Geades:

I would add to that. Bernardo receives at least a monthly communication from the HighRadius team, I forgot their exact title, but there’s a team dedicated to reaching out to the customers and asking, “How is it working for you? Is there something else you need? Are you getting expected value from it?”, as well as providing metrics such as match rates and check versus electronic kind of thing. So, he doesn’t have to even look for it, they just reach out and provide that value which is exceptional.

[18:58] Alicia Geades:

And another thing is that it is always available to open the help ticket, right? So if we ever see things come through that maybe just don’t look right to us, maybe that should have posted in our minds, but we always have the opportunity to reach out to help ticket and say, “Hey, could you look at this with us and see if it’s a system issue”, and most of the time, it’s us. But also, as we have gains, new customers or our customers have changed, maybe how they’re paying, we have a great opportunity to be able to go in and adjust the rules that we wrote originally. So that you know what you sort of set in the beginning, you’re not stuck with forever. So any questions?

[19:49] Bernardo Aguilar:

So the question was, how long after implementation did it take to get to 86% half a year? We know, in the beginning, during hyper care, you’re kind of constantly updating. My goal was to try to identify as many of those customers early on, but during hyper care, and a couple of months after that, you can see the benefit, the ones that you missed, the customers that we missed, and the rules that needed to be tweaked. So yeah, half a year, six months.

[20:29] Audience:

On the reason codes, how much are you using the reporting to dig into? Which of your customers are taking trade discounts versus unearned discounts and adjustments?

[20:40] Alicia Geades:

Oh, great question. I should have covered more about that. This is a whole new world for us. We had just very rudimentary reason codes. We are using the FSM dispute management platform in SAP. So we had always used that but we had good reason codes coming out of the cash applications process. In this implementation, we were able to set up not only reason codes within all, but we could also find the root cause of the reason codes. So we looked at what we thought our customers were deducting for and set those up and then went in even deeper. So let’s just say maybe one of the reasons is the price error, or it is because of the sales group, because of the shipping group. It could be because of the order entry group too. We try to get down to the real root cause. So it’s been extremely valuable.

[21:34] Alicia Geades:

And it wasn’t a hard process, we had to have a couple of iterations. Because sitting down with no real knowledge, with no reporting knowledge is harmful. I guess, because of the way our customers were behaving, we kind of had to overtime, adjust that. But the reporting is great. Now we’re able to do it at our fingertips, download what all of our deductions were for any period of time, what the reasons and root causes were. And there were small balance write-offs. We were talking about this with somebody the other day, we write off everything automatically that is $25 or below. And that was just forgotten in the past. And a great thing about this is we still do that. But at the end of a month, we look back at those small balance write-offs and say-O kay, this is a pattern every month, we’re seeing the same customer, what’s going on what we missed. And so we can, you know, go back and at least try to fix it for going forward.

[22:29] Audience:

So you said a lot of the time spent was in doing cleanup, was it on your customer information? So for example, I don’t know if you have a lot of parent-child hierarchy and where that has to be maintained, and that data transfer from your current system or your old system to the new system. Was that a kind of a chore?

[22:51] Alicia Geades:

It was and so the benefit of any new customers going on the platform today is, I was saying about the MICR information being stored on the HighRadius platform. Now, there is a huge benefit, because we spent a lot of time with HighRadius’s help because they were able to pull our old payment files and do a lot of matching for us. But we still had to get it in the system into SAP. So we tried to automate that as much as we could with the winding shuttle, I think, but still a lot of manual work there. But like I said, that piece is not as big a deal for new customers. Still, some master data cleanup is necessary with the account linkage. I think we had it.

[23:43] Audience:

I actually have two questions. I’ll try getting short. With your data cleanup. Did you start doing that after implementation started? Or was that something that was predefined and started early?

[23:56] Bernardo Aguilar:

All of you know that was something I did on day one of being hired.

[24:03] Bernardo Aguilar:

With any kind of data migration or a new implementation, that’s been the one thing that you learned about through project management. The data cleanup. So immediately, I started identifying those customers and working on it to get it resolved.

[24:18] Audience:

Okay. And then the second question is- Do you also have the collections module through the roof?

[24:23] Alicia Geades:

I should also say that Bernardo, I think had two or three days on the job. And then we were like, “Hey, we’re doing this project”. So that kind of explains some of that timing.

[24:32] Audience:

I’m just wondering about the timing of the collection. So yes, you don’t want someone to call and collect on something that it might be currently sitting in a cash app batch.

[24:44] Alicia Geades:

So we don’t utilize the HighRadius collection model today. We use the SAP old FSC collections, but I’m here shopping for the collection in the cloud. So I’m excited about it. And I believe they said they can make it almost as real-time as you need it to be. So it just depends on how many feeds you can get in and out. So, you’re right if something posts a payment post today, that may not be immediate on the cloud. But as far as cash apps go, it’s been the way it feeds into our SAP environment and what we’re doing for collections today, it’s been a huge benefit.

[25:36] Anchor:

So just to follow up on that, they are very customizable, and we do have demos going on all day down in the field, and we also can schedule a one on one if you would like that as well.

[25:48] Alicia Geades:

I have mine at 2:30. You all can come with me.

[25:55] Audience:

I just have a question. So how quickly were you able to turn off the lockbox key?

[26:01] Alicia Geades:

I think it was some days, wasn’t it?

[26:04] James Robinson:

Right? I guess around. How long did it take us to implement?

[26:12] James Robinson:

About a month.

[26:14] James Robinson:

Six weeks. And then we turned off keying within days after implementation.

[26:26] Audience:

So you showed the lessons learned after that project. So if you had the opportunity to do the project again, what would you do differently?

[26:39] James Robinson:

Probably, I would have looked at the more holistic collection and cash application. So we opted at the time to just sort of put our toe into cloud-based technologies. We didn’t have any cloud-based technology across the board and finance. So we were the first to dip our toe in. I wish we would have just jumped in. That’s what I would learn. So whenever we went to look for a partner, we looked for somebody that was leading edge. You know, I was happy. Last year, my director came to us and said, “Have you ever heard of RPA? Robotic Process Automation?” Yeah, we’ve been using that for years with HighRadius. So you know, it’s the new buzzword, but it’s old us, luckily.

[27:39] Audience:

I may have missed it. Do all of you use strictly a lockbox? Or did all of you have checks that you were doing desktop deposit or any other form?

[27:46] Alicia Geades:

We stopped doing desktop deposit. So we just tried to redirect everybody to send it to the lockbox. I was going to say unique, but maybe not. We have eight different lockboxes that feed into this solution. Also should have told you earlier that it’s very robust, it can handle almost any circumstance you have. But for now or time of implementation, we decided that we wanted all those images and everything to go through the lockbox. So sometimes we lose a day or so if we do get a paper check at a desk and then FedEx it to the lockbox. But we have ongoing kind of customer communication if we do get something at one of our locations to communicate back and say send it to the lockbox or start paying us electronically.

[28:35] Anchor:

Okay, we have time for one more question.

[28:38] Audience:

I was curious about your remaining 14% and what insights you’ve gained from what isn’t going straight through.

[28:44] Alicia Geades:

On the check matching. For us, it’s handwritten. So we still have our customer base. We sell to very large corporations down to your small kind of farmers. And so we just have such a varying customer base, we don’t have the perfect remittance every time or the perfect check. We have sometimes a personal looking check handwritten with a sticky note on top with handwritten invoice numbers on it. So unless we can kind of get that section of our customer base to move. I don’t know if we’ll ever get to that perfect check. So like I said that 86% is almost perfect for us. It’s almost 100% in our minds.

[29:33] Anchor:

All right. So thank you very much, guys. Like I mentioned before, you are also able to catch them outside of this session. And we do have demo stations on the field with technical experts that can answer any questions that you may have as well.

[29:49] Alicia Geades:

Thank you so much. Thank you, everyone.

[0:00] Anchor: Good morning everyone. How are you doing today? Did you guys join us for the party last night? [0:06] Anchor: Yeah, we got a full day of activity so let’s get started. I do have a little joke for you guys in case you’re not feeling the energy after last night. [0:27] Anchor: So with us today we have Lhoist. [0:32] Anchor: So we have James, the treasurer joining us today. We have Alicia, their credit manager, and Bernardo, the AP and AR manager. [0:43] James Robinson: Hey, good morning. [1:03] James Robinson: I’m James Robinson, I work with Lhoist North America. A little bit about Lhoist. It’s a 130-year-old company, family-owned out of Belgium. So, about 2.2 billion euros a year in revenue, so not a huge company. But you know, Fintech is for everybody. So even if you’re not huge in a fortune 500 company, there are opportunities out there. So, we manufacture lime, which is mining limestone, and then signing it or burning it to make chemical lines, which is calcium oxide. So not a complicated process, but still an important one. It goes into your life every day. So it’s used in power plant,…

What you'll learn

  • Lhoist’s cheatsheet for vendor selection in cash application automation
  • Top 6 implications of slow cash posting on business processes

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HighRadius Cash Application Software enables the end-to-end automation of the cash application process that covers major benefits such as AI-enabled data capture for remittances, auto-linking of payments with open invoices, cost-cutting on lockbox fees and easy compatibility with any system due to its ERP-agnostic Saas infrastructure. Apart from the major benefits that it has, there are some key features which can not be missed out, some of them are Email Remittance capture, Discounts and Deductions Handling, Check Remittance Capture, Web Remittance Capture, Invoice Matching, and RDC & Mobile Payments.