A $200M Food & Specialty Distributor Turns Driver-Collected Checks into Posted Cash Within a Day

The Objective

To deliver faster cash and less manual keying across a check-heavy receivables operation, without forcing a change on its check-paying customers.

The Background

This is a 40-year-old New Jersey food and specialty distributor with $200M in annual revenue. It serves two customer worlds: modern-trade retail accounts that pay by ACH, and a long tail of independent retail and foodservice accounts that pay by check, either mailed in or handed to a route driver or salesman.

Before Global PayEX, the distributor ran ACH and check collections through one manual process. Eight people on the AR team, a bank lockbox, and no structured remittance data stood between every customer payment and the ledger. DSO was about 45 days, on an AR book of about $25M at that DSO.

The Numbers

0- 1 Days

to posted cash, down from 4+

~ 0%

Check volume on the new structured path today

0→ 1.8%

processed annually with straight-through posting

~ 0→ ~35

Days DSO, current to modeled target

$ 0K–$720K

Recoverable AR value a year at current adoption (indicative)

$ 0K

Saved per $1M of card volume

The Challenge

Every check-paying segment ran on paper, mail, and manual keying, with no structured data until a person touched it. The same friction repeated on every check, and modeled on an AR book of about $25M at current DSO, it left an indicative $400K–$1.2M in recoverable AR value on the table every year.An illustrative payment shows how it played out. An independent retail customer writes a check for $3,940.18 and hands it to the route driver.

01 Paper, Mail and Manual Keying:

The check arrives with no stub and no invoice numbers. The driver's batch is mailed to the lockbox, where the check is imaged and its amount keyed by hand against the open-invoice list. Eight people key and reconcile every payment by hand.

02 Unexplained Deductions with No Evidence Trail:

An analyst finds five open invoices totaling $4,150.18, so $210 is missing, a deduction nobody explained. Short-pays are chased case by case with no systematic evidence, and the $210 sits as unapplied cash awaiting a phone call.

03 Slow Float:

Funds finally clear through the lockbox three-plus days after the check left the customer's hands.

04 No Customer Visibility:

Customers cannot see or choose which invoices a payment covers, and they cannot see what was applied once it is posted.

05 Costly Card Acceptance:

A 3.0% MDR applied to every card payment, never optimized.

Our Solution

The distributor asked for faster cash, less manual keying, and no forced change for its check-paying customers. With Global PayEX, the same eight-person team and the same check-paying customers moved check volume onto structured, same-day submission, with the same driver collecting the same check. Six months into rollout, the same $3,940.18 check now moves through the process like this:

01 Structured Remittance at the Moment of Payment:

The customer selects the five invoices totaling $4,150.18 in the EIPP portal, flags the $210 deduction, and hands the driver a check for $3,940.18, which is photographed on the spot. The physical check still follows by mail, with exception and return handling built in.

02 Automatic Check Capture with AlgoriQ:

AlgoriQ converts the photo into the bank's required check-processing file automatically, with no manual keying.

03 Three-Way Matching and Deduction Validation:

The system matches the payment, the bank, and the remittance, and the $210 is validated against the evidence on file and auto-resolved.

04 Same-Day Bank Submission:

The check falls into that day's batch and is submitted the same day it is collected, directly to the client's existing bank in its required file format. There is no bank change and no lockbox.

05 Auto-Posting with Full Customer Visibility:

The bank confirmation is auto-ingested and posted, and the customer sees the applied payment and the resolved deduction in their own portal.

The work did not stop at checks. The other ~30% of collections moved too:

06 Large-Retailer ACH, Reconciled Automatically:

Remittance advices from modern-trade accounts used to be matched to invoices by hand. AlgoriQ now reads them and reconciles each payment to the open invoices.

07 Card Acceptance, Repriced:

MDR was cut from 3.0% to 1.8% through Level 2/3 transaction data, saving $12K per $1M of card volume. This result is realized, not modeled.

The Results

Six months in, structured same-day processing is live for the customers who have made the switch: same driver, same check, captured once instead of chased for days. About 60% of check volume now runs on the new path, while DSO currently stands at about 45 days against a modeled target of about 35 days. The same eight-person AR team has been redeployed.

Metric	Before	After
Days to posted cash	4+	0–1
Manual touches per check	Several: mail, key, match, chase	One: a photo
$210 short-pay example	Unexplained, chased by phone	Validated automatically against evidence
Lockbox	Active	None

The gains show up across the process:

Float cut from 3+ days to about 1: Checks are submitted the day they are collected, so funds are available within a day, not three-plus.

Keying removed for ~60% of checks: The same team now handles exceptions and deduction follow-up instead of data entry for every check on the new path.

Deduction evidence, automatic: Short-pays are checked against evidence the moment they are flagged.

Customer visibility: Customers on the new path see and choose which invoices a payment covers, before and after.

Check-to-ACH migration, underway: 20% of check payers have moved fully to ACH, and of the checks that remain, about 60% now run through structured capture.

Large-retailer ACH and card acceptance: Remittance advices from large retailers are reconciled automatically, and card MDR has fallen from 3.0% to 1.8%.

At current adoption, this recovers an indicative $240K–$720K a year in AR value, rising toward $1.2M as more check-paying customers move onto the new path. That figure covers check-related value only, and card savings are additional. It uses the same model as the current-state estimate and is not yet a measured result.

The approach is proven elsewhere on the platform. Measured at another food distributor on Global PayEX, 87.7% of invoices matched first time and 94.4% of checks posted cleanly on the first attempt.

“A highly adaptable solution that has transformed the way we do business”

We have been using FreePay since 2017 and the improvement and efficiency it has brought in our collections and account receivables management has been remarkable.

FreePay has helped deliver electronic invoices to our Channel Partners in real time, process payments with all our business terms plugged in and taken care of our end-to-end customer account reconciliation.

Our Channel Partners have also been very appreciative of introducing FreePay to them especially for its feature capabilities, ease of use, transparency and customer support, without adding any cost to them.

Joseph Selvakumar , Vice President – Commercial ,

V-Guard Industries Ltd.

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