a bank of america case study

How onE Publ ic orGAn i zAt ion convErtEd to ElEctron ic PAymEnts

A BANK OF AMERICA CASE STUDY

How one public organization converted to electronic payments:A new platform that yielded six figures in savings.In the corporate world, “a penny saved is a penny earned” is usually pretty accurate. Efficiency gains and cost cuts usually influence the bottom line. A government entity’s goal, on the other hand, is to service the local constituents, not shareholders.

So when the Duval County Public School District (DCPS) in Florida decided to eliminate paper and pay its vendors electronically, it made sure that every penny it saved was put to good use: in its classrooms. How many pennies? DCPS expects to generate more than $250,000 a year in cost savings and rebates by embracing electronic payments.

If that sounds to you like a welcome relief, you’re not alone. Across the country, state and local governments with budgets that are already stretched thin are facing steep reductions in tax receipts, as a result of economic slowdown. The pressure on public officials to do more with less is only going to multiply.

dcPs expects to generate more than $250,000 a year in cost

savings and rebates by embracing electronic payments.

But as DCPS found out, Bank of America’s Comprehensive Electronics Payment Suite can help public sector entities reduce their overhead, banking fees, streamline accounting processes and qualify for cash rebates based on their card-based spending volume. Implementing Comprehensive Payments requires little in the way of upfront investment or technology upgrades and enabled DCPS to redeploy administrative resources to more critical tasks by minimizing the need to handle paper checks.

With 123,200 students in 161 schools, Duval County has the 20th-largest school district in the nation. But the community’s commitment to providing world-class educational opportunities for those students extends far beyond the classroom. Through the non-profit Alliance for a World Class Education, local business leaders volunteer their time to help identify more efficient and productive administrative processes.

In 2006, the Alliance put together a task force with finance experts and senior leaders of DCPS to explore ways to better handle payroll and accounts payable. The initiative, called Project INVEST, was charged with finding ways to improve business practices that would result in at least $6 million in annual savings. More specifically, DCPS was challenged to look to the private sector to identify and deploy cost-effective process improvements.

After seven months of work, the task force produced its recommendations for overhauling the district’s payment

processes: migrate payables from checks to card and ACH-based electronic transactions, and expand the use of purchasing cards. Bank of America, the world’s largest provider of treasury management services and a leader in the transition to electronic payments, was chosen to implement these changes.

Comprehensive Payments is Bank of America’s suite of solutions for organizations that want to make the transition with minimal investment, resource drain, and disruption to their core business. Through a single-file submission, Bank of America enables accounts payable paper check to electronic payments migration through card-based (ePayables)


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and ACH-based (PayMode®) solutions [see inset]. Both solutions are designed to work within an organization’s existing payments processes and accounts payables systems. For example, ePayables provides card-accepting vendors with a unique account number. As part of the current payment process, an electronic file is sent to Bank of America containing remittance information for each invoice. The credit limit on the card is increased by the designated amount of the payments and Bank of America notifies your vendor with the remittance information and payment instructions via email. When transactions are completed, credit limits on the cards return to zero.

For DCPS, the benefits of moving vendors to ePayables were obvious. It eliminates the costly and time-consuming process of processing paper check payments, and reduces the associated bank fees. Moreover, DCPS will benefit from extended float, as all payments to Bank of America are based on a billing cycle, and not due at the time of payment to the vendors.

Last but certainly not least was the potential for generating rebate revenue. Bank of America pays an annual cash rebate that’s calculated as a percentage of the total amount the district spends using ePayables and Purchasing Cards. On top of the efficiency, cost savings and fraud protection, the rebate potential is one more incentive to expand the use of these card-based solutions.

comprehensive Payments is bank of America’s suite of

solutions for organizations that want to make the transition

with minimal investment, resource drain, and disruption

to their core business.

More importantly, Bank of America teamed up with DCPS to get the job done. Bank of America provided a dedicated Implementation Engineer to help manage the implementation and a team of experienced staff that contacted and enrolled vendors interested in participating in the ePayables solution. It was not necessary for the district to buy additional software or upgrade their hardware to implement ePayables. The Bank worked with DCPS to create a new payment type and general ledger codes which enabled its SAP accounting system to transmit payment instructions from their desktop to Bank of America for processing.

Bank of America drove the vendor enrollment strategy and executed the vendor enrollment program. While DCPS was pleased with the speed in which vendors adopted ePayables, they decided to further accelerate adoption by designing a vendor incentive program. Vendors that adopted ePayables would be paid immediately; all others would now be subject to state-mandated payment terms of net 30 days.

Two solutions. Multiple benefits.

Bank of America’s Comprehensive Payments suite consists of two core solutions. PayMode® is a secure payments processing and remittance delivery solution for vendor payments and employee reimbursements. The solution increases the speed and efficiency of a client’s Accounts Payable payments by converting checks to electronic card and ACH payments. As one of the few fully-integrated “many-to-many” networks, PayMode allows any company using PayMode to pay any of its 70,000+ enrolled suppliers on the network. Leveraging the PayMode network, Bank of America has expanded the PayMode offering to include electronic invoice receipt, routing, and processing.

Complimenting PayMode is ePayables, Bank of America’s card-based AP payments solution. Through patented technology Bank of America enables payers to dynamically fund cards, and deliver remittance information and payment initiation instructions to vendors.

Combining PayMode and ePayables, Bank of America’s Comprehensive Payments solutions can process all vendor payments and employee expense reimbursements– including paper checks and wire payments – in a single- file solution. Bank of America helps maximize vendor adoption through its proven, turnkey vendor adoption program. The result: substantial check processing cost savings, extended float opportunity, and increased revenue potential through rebates.


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The results have exceeded DCPS’ expectations. To date, approximately 120 vendors representing roughly $35 million in annual spending have enrolled. Ease of use, along with the benefits of accelerated payment has driven adoption for both small businesses and national vendors.

While DCPS achieved strong vendor adoption with ePayables, it recognized that, to maximize vendor adoption of electronic payments, it would need to provide an alternative payment method for non card-accepting vendors. Taking their electronic payments initiative to the next level, DCPS is launching their use of Bank of America’s ACH-based electronic payment and remittance delivery solution: PayMode Leveraging PayMode’s existing vendor network of 70,000+ vendors (many of which DCPS is paying by paper check today) and proven enrollment program, DCPS anticipates the majority of non-card accepting vendors will quickly adopt PayMode. Similar to ePayables, PayMode works within DCPS’ existing payment processes and SAP account system. Early results in using PayMode to further drive ePayments adoption have been impressive. A large supplier of custodial services recently volunteered to participate as an early adopter, and found it to be “flawless.”

And DCPS is not done yet. Recognizing that there will be few remaining checks to be printed, DCPS is asking “Why do we need to keep the existing overhead to print checks going forward?” For payees that still require paper checks, the district is considering implementing Paymode + , which will help to reduce the internal printing and mailing of paper checks. Additionally PayMode + can handle wire payments, resulting in all Accounts Payable payment types — card, ACH, paper checks, and wires — to be processed from a single file from DCPS to Bank of America.

The resulting costs savings, extended float benefits, and rebate generation are substantial. Additionally, DCPS has reduced the risks inherent in paper checks, including lost, stolen, or misdirected check payments.

The final piece of the puzzle for the district was to greatly increase its use of Purchasing Cards. DCPS had used cards in the past, but the Bank of America P-Card program allowed DCPS to consolidate almost its entire employee spending in one safe, easy-to-manage payment method with robust security features. Key process improvements include eliminating issuing T&E checks in advance, cash purchases for urgent supplies, and handle small purchases through costly accounts payable/invoice processing. Similar to ePayables, DCPS realizes extended payment float on purchasing card transactions, as payment to the bank for these payments does not take place until the end of the billing cycle.

What lessons did Duval County Public Schools learn in making this transition from paper to electronic payables processes? The first is to make sure your organization has an internal champion in the senior ranks who can help manage any resistance to change and process improvements. Secondly, make sure key internal stakeholders that have contact with your vendors (Accounts Payable, Procurement) understand the benefits and process of paying electronically, and help encourage the vendor adoption. And finally, make sure you pick the right organization — one that will deliver the technology, solutions, and vendor adoption programs that allow you to achieve your goals.

If you’d like to learn more about how Comprehensive Payments can ease the transition to an electronic payments environment and make your payables process less costly, more efficient and more reliable, contact a Bank of America representative today.

This article contains case study information only and is not meant to substitute for your own internal procedures, which are appropriate for your company. This information is not legal or tax advice. You should consult with your own legal, business and/or tax advisors to discuss your company’s needs. Results are not always typical.

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