The ways that financial services firms employ document technology vary almost as much as the
range of services they provide and the niches in which they thrive. As in any transaction-intensive
industry, the move to the latest technologies not only delivers faster, more efficient access to
information, it also yields improved customer service and support for growth without big increases in
staffing.
At Automotive Finance Corp., intranet-based document management helped support 25 new
offices and increased credit processing volumes by 50%. Leasing heavyweight GATX integrated document
and report access with its ERP system, recovering its investment within six months. Finally, National
Factoring Service brought check processing in house so it wouldn't be at the mercy of
increasingly expensive commercial bank services.
In the past two years, the management at Automotive Finance Corp. (AFC), an Indianapolis-based
wholesale auto finance provider, completely rethought the company's business objectives and
processes. Company President John Fuller wanted to develop new services for the company's
used-car dealer and car auction house customers. Information technology manager Mike Buxton knew this
would require a new arsenal of IT tools — particularly document management.
The challenge was
simple but daunting. The company needed to process more credit approvals faster with the same number
of people. This would allow the company to support new services as well as geographic growth.
After
a thorough review and five-company bid process in 1998, AFC implemented a DocuPact integrated document
management system from InterTech (www.intertech.com).
The system helped AFC quickly expand operations
by more than 30%, opening 25 new loan offices and processing more than 50 % more applications without
dramatic staff increases.
One of the reason's AFC chose DocuPact was the availability of a
strong Web component. All 84 branch offices in the U.S. and Canada now have round-the-clock access to
files via an intranet developed using DocuPact's browser-based viewer.
AFC now handles
approximately 25 new credit approvals per day (for a total of about 5,000 per year). The company also
scans and enters any of the approximately 13,000 customer backfiles that are "touched" as
part of a line-of-credit increase, a change of portfolio or a contract change. Buxton predicts that
the annual contract review process will bring the entire backfile into the system by the end of 2000.
AFC relied on InterTech to put together a complete solution that begins with a car dealer's
application for financing. The branch offices had always faxed their applications to headquarters
along with supporting documentation including an application summary with references, a copy of the
dealer's license and individual driver's licenses, a copy of a blank check for bank account
verification and other financial data.
Today, each dealer has a customized cover sheet designed to
work with Teleform, a document capture and forms processing system from Cardiff Software
(www.cardiff.com). AFC's receiving fax server
converts the images to TIFF files and commits them to a
directory. The Teleform system then extracts pertinent information and feeds this to the DocuPact
system, where event objects set off workflow triggers to make loan processing more efficient.
The DocuPact and Teleform systems will also be integrated with a new business system being designed
for AFC by a third party. Outside credit verification documentation will be linked directly with each
credit file. InterTech also wrote a component to merge data streams from the new business system with
standard (word processed) contracts. This will allow AFC to send contracts to the branches
electronically. Printing onsite at the branches will save a huge amount of administrative time and
will further expedite the credit process.
Later this year, AFC plans to develop a link between DocuPact and the consumer loan organizations that
provide financing to the dealers' constomers. Dealers can benefit because affiliation with a
large, reliable organization like AFC makes it easier for them to sell their retail paper to consumer
lenders.
"Our business is about interfacing with other service providers to provide a one-stop shop for
wholesale used car dealers, so we are partnering and building new services," says Buxton.
Lenders find it easier to process documentation and transactions electronically with AFC, says
Buxton. AFC benefits because it gains greater control of the payment process as follows: The consumer
lender pays AFC, which deducts its fee and a portion of the amount to cover the loan payment due from
the car dealer. The remainder is sent to the car dealer. This guarantees faster and more reliable
repayment of dealer credit.
AFC paid $70,000 to license the DocuPact software, and it pays $16,000
for an annual maintenance contract. The implementation required three new NT servers — one each
for DocuPact, the fax server and the Web component — at a total cost of $25,000. Fax software and
modems cost $15,000. The imaging applications, including the Cardiff software, scanner, optical
storage and management software added another $45,000.
AFC has also opted to have InterTech add
customized functionality including workflow enhancements and integrations with the third-party
business system. This cost approximately $240,000. The company has budgeted $150,000 to roll the
system out to another department and add functionality such as the retail loan application. Scanners
and other hardware will be added to handle a heavy volume of backfile conversion.
Fuller says AFC
will use its large customer base and new IT capabilities to attract other service providers and to
offer more value-added services. "The opportunities are limitless," he says.
Leasing Giant Links Legacy Docs to ERP
When a company introduces a new business system, it needs a strategy to make the data from its legacy
system available. Some migrate data from one system to the other. Others run systems in parallel: one
for historical information and one for new business activity.
During its 18-month implementation of a customized leasing solution built on SAP's R/3 ERP
system, GATX Capital of San Francisco continued to maintain two legacy systems. But at the conclusion
of the project in early 1998, they migrated legacy data to an R/3-compatible archive using iXos
Archive from iXos Software (www.ixos.com).
iXos Archive uses the same interface used by SAP R/3, so
users didn't require specialized training. Historical account information is readily available
from the archive while current transactions are stored directly in R/3.
GATX Capital is a global financial services company that provides asset-based financing for commercial
aircraft, railcars and locomotives, bulk storage terminals, pipelines, ships and other assets. The
company acts as an investor, arranger and asset manager on its own behalf as well as in conjunction
with partners and managed portfolio clients for assets with an original equipment cost of
approximately $10 billion.
GATX's leases range from a few months to as long as 30 years, so employees needed access to
leases initiated long before the SAP implementation. Yet the company's legacy portfolio
management and accounting management systems were expensive to maintain. The portfolio management
system contained roughly 500 customers files, with each holding 800 to 1,000 pages. The accounting
system contained approximately 1,500 reports averaging three to five pages. Additional reports were
held in microfilm storage. Counting labor and IT expenses, GATX estimated that it would spend roughly
$40,000 every month to maintain these systems.
GATX ultimately selected iXos-Archive, which is an
integrated suite of imaging and archiving designed for SAP users. SAP's DocuLink component
enabled a two-phase migration of the separate legacy systems from March through October 1998.
Today, the R/3 interface provides speedy access to both R/3 and associated non-R/3 information,
whether it's historical leasing information or a vendor invoice that was scanned into the system.
Users have responded positively to the ease of access provided by the system according to Derek
Williamson, vice president of information services at GATX. Productivity has increased because end
users can produce reports on reserves, maintenance, depreciation and other critical metrics. This
previously required IT support and a one- to three-day turnaround.
The iXOS software cost $300,000,
while $150,000 was spent converting (i.e., scanning and indexing) the GATX backfile. Project
consulting services totalled $100,000, and additional hardware costs included a couple of new servers
costing $5,000 to $10,000 each.
Considering the high cost of maintaining the legacy systems,
Williamson estimates GATX recovered its investment within six months, but this doesn't even take
into account the reduced cost of printing and storage of paper files.
In the year ahead, Williamson says GATX is planning a small pilot project to bring schematic drawings
and photos of aircraft and ships into the imaging system. In addition, the company is debating how to
move the images in the iXos system throughout the organization using workflow functionality. The
system offers a link to Lotus Notes, or it can use the workflow capability within R/3.
Each day, 1,500 to 3,000 envelopes arrived at Denver-based National Factoring Service. Each envelope
contained a bank check, but it was all work and not really a reward when the job of processing
payments took all day.
An image-based check and remittance solution recently cut this job down to
approximately an hour, but that doesn't mean employees will have free time on their hands. This
$50 million company handles billing for a range of companies including long-distance carriers and
goverment contractors. Naturally, management plans to expand the company's client list now that
it can handle the load.
Doing more business with the same staff was only one of many reasons this accounts receivable
management and lockbox services organization changed its business processes. The company took on
payment processing in-house because the service it received from commercial banks was increasingly
expensive yet less reliable. Gary Bryan, chairman of National Factoring Service, says the company
experienced frequent errors with checks not credited to the right account.
"We decided we would be a competitor to banks and do it better, offering better customer service
and controlling the process ourselves," he says. "So far, it's fantastic."
Under
the old process, the company opened mail by hand, photocopied checks and then sent the checks to the
bank. The bank then endorsed the checks and sent them to a processor, which acted as a clearinghouse
between the bank and the Federal Reserve. National Factoring also recorded cleared payment information
in a spreadsheet for its clients to view.
The entire process took four to five days. Often,
customers who paid at the last minute — say for their long-distance telecommunications service
— might have that service shut off. The long-distance providers would then have disgruntled
customers in a highly competitive market. In addition, National Factoring paid 50 to 75 cents per item
to the bank for its services, then marked up this cost to its customer.
The company reasoned that it could provide better service internally by going straight to the
processor and then passing the savings on to the customer to gain a competitive edge.
After a year of examining options, the company selected Aqurit software from Aquracy.com. The
implementation of Aqurit went live in September 1999 and it took all of two days. Aquracy.com
preloaded software and customized reports on the workstation prior to delivery, so only minor
adjustments were needed.
Under the new process, National Factoring opens and scans the checks and accompanying remittance slips
and stores the images. Aqurit software integrates CheckScript, handwriting recognition software from
Parascript (www.parascript.com).
CheckScript is at the heart of the system's PassOnce feature,
which captures the bank information and automatically reads and cross-validates the CAR (courtesy
numeric) and LAR (legal handwritten) amounts. Confirmed data is immediately posted to a general ledger
file.
National Factoring now endorses and does its own micro-encoding of checks, so it can send them
directly to the processor. The company handles the accounting management itself with far greater
accuracy than it received from large banks, says Bryan. Each night, National Factoring uploads the
data to its customers so they can download it into their accounting systems and view it the next day
without any rekeying.
The costs included $40,000 for software, training and custom reports, and $5,000 for the PC. National
Factoring also spent $30,000 to purchase a scanner and an automated envelope opening machine from NCR.
National Factoring recently added two large payment processing clients and a newly acquired escrow
company, so it plans to expand the Aqurit configuration and spend another 50% of its original
investment.
With thousands of items processed daily, the company will easily recoup its capital investment, says
Bryan. Additional revenue will come from selling value-added services to its customers. For example,
once a month, the company burns the check images onto a CD with search capability and sends this to
the customer. An Internet application currently underway will allow customers to enter a secure site
and search for images of any payment made as recently as the previous day. The company's escrow
unit will be able to offer financial services secured by receivables.
As banks have shifted their
focus to include additional lines of business like insurance and investment products, Bryan says
entrepreneurial private companies have stepped in to do the services traditionally only done by banks.
"Companies like us can do it more effectively and less expensively," he says.
