Midrange Stuff, OS/400 Edition

Mohawk Paper Company's accounting services department used to have a list of problems associated with check printing. To begin with, it needed two dot matrix production printers to issue its accounts payable and payroll checks. It wasn't that there were so many checks to print, but that one printer had to be at the ready, in case the other broke down. That happened more than once, but it wasn't the only problem, or necessarily the biggest.

Assuming that the print runs went well, there were still more steps to perform, says Mohawk's accounting services manager, Mike Ruhm. The payables checks used multipart forms and had to be carried to a bursting machine for separation. All of the checks were printed on tractor-feed stock, and if the perforated edges with sprocket holes were accidentally torn loose, the automatic feed would malfunction, so the checks had to be individually pressed against the signature machine stamp.

"We used different signature plates for accounts payable and payroll," Ruhm says. "And in either case you always hoped you didn't have a problem, because, if you did, you might have to reprint the whole check run."

Today, the dot matrix printers, bursters, and signature machines have been retired from Mohawk's payment process, Ruhm says. Now, data for the 1,000-plus accounts payable checks and 1,000-plus payroll checks that the company generates each month are processed using ACOM Solutions' EZPayManager software, which substitutes stored electronic forms and MICR laser printers for preprinted check forms. When a check run is scheduled, EZPayManager merges the payment data in the accounting system with the stored electronic forms, and spools the merged files to a secure MICR-enhanced laser printer, which prints complete, signed checks on blank security check stock.

Headquartered in Cohoes, New York, at the confluence of the Mohawk and Hudson rivers in upstate New York, the privately owned Mohawk Paper Company is a leading manufacturer of premium printing paper stock. The company operates plants in Cohoes and in nearby Waterford, and sells its products through distributors around the world. Mohawk employs two popular software packages, SSA Global Technologies' BPCS ERP system and Software Plus' human resources software, both of which run on an iSeries Model 820.

Ruhm encountered the ACOM payment solution at a Software Plus user group show in late 2000, and he immediately saw the potential savings by using electronic forms software to print payroll checks. Mohawk's management authorized the ACOM project based on its promise to deliver a faster, less-complicated, and more-economical use of personnel and production resources.

Initially, Mohawk purchased a comprehensive magnetic ink character recognition (MICR) laser check solution comprised of the MICR checks module, a forms design tool, and two Xerox DocuPrint 2125 MICR laser printers from ACOM. Options included ACOM's version of Positive Pay, CheckFraud Alert, and the Manual Checks module, which gave Ruhm the capability to generate single checks automatically for the first time.

Mohawk acquired the check solution in late 2001, and it relied on ACOM's professional services group to implement the payroll checks solution, which was followed by the accounts payable checks. To create the electronic forms, Ruhm provided ACOM with sample data, as well as copies of the company's check forms. The electronic forms essentially replicated the appearance of the preprinted forms, incorporating all relevant company logos, address information, account numbers, MICR lines, and signatures.

Mohawk's MICR check solution from ACOM uses payee and amount information that came from the BPCS and Software Plus systems. Check numbers were assigned during the check run, so that if a check is spoiled or a printer jams, only the spoiled checks have to be reprinted. "This is a really important issue," Ruhm says. "Before, a spoiled check meant a spoiled check run, because the sequence would be thrown off." Check detail--the remittance advice statement for accounts payable and advice of deposit for payroll stub data--is incorporated in the respective check forms and printed with the checks.

Ruhm says he's happy with the system. "EZPayManager has been terrific for us," Ruhm says. "Our check runs are faster and require less work. We're saving significant money on preprinted check forms as well as on the maintenance of the post-processing equipment that used to be required. No more bursting, no more decollating, and no more signature machines. The MICR-laser printing is crisp and clear and gives the checks an impressive, professional look."

After a year's experience with MICR-laser check printing under his belt, Ruhm decided to take another step toward automating as much of his disbursement process as possible. In late 2001, the company purchased the EZPayManager/400 ACH payment solution, which enables electronic payments through the banking industry's Automated Clearing House network. Because the Automated Clearing House envelope is capable of carrying only a very limited amount of data, while remittance advice information can be very extensive, Ruhm opted also to purchase ACOM's eMail module for providing the payment detail. It, too, is operated directly from the iSeries server.

Mohawk has implemented the ACH solution for accounts payable, and the company is conducting a program to convert its tier-one and tier-two vendors from checks to electronic payment of their invoices. A few vendors signed on very quickly and all are delighted with the result, Ruhm says. Funds are scheduled for transfer on a specific date, and at the time of scheduling, the vendor is notified by e-mail when the transfer will take place, usually two days later. Simultaneously with issuance of the notification, a second e-mail, with the remittance advice information, goes to the vendor, indicating the invoices being paid and the purchases that they represent.

"Electronic payment saves time, money, and other resources, on both ends," Ruhm says. "There is no paper handling. Payments go straight to the vendor's designated bank account, and the e-mailed remittance advice data can be forwarded directly to the appropriate back-office system for reconciliation. We find that vendors really appreciate the precision of this approach, since they know in advance just when the cash will be available to them. Mail delays and losses are no longer a factor."

But Mohawk didn't install the ACH solution strictly to benefit its vendors. Mohawk cut its per-payment cost by at least 80 percent when it moved from preprinted checks to the MICR laser checks, Ruhm says. We cut our payment costs to almost nothing, and we experience easier, more effective cash management, since we know precisely when the funds will leave our account," Ruhm says. "We have an electronic record, so if there is a question, we can very quickly confirm when the payment was made and what it was for."

Victor Wortman is a freelance writer specializing in information technology subjects. He is based in Santa Monica, California. E-mail: vwortman@earthlink.net