TREASURY SERVICES
Textron Centralizes Lockbox Operations and
Improves Efficiency with Imaging Solution
BUSINESS BENEFITS
Reaping the rewards of a centralized
receivables system
By centralizing and standardizing their diverse
Overview
system of receivables, Textron realized significant
One of the world's largest and most successful multi-industry
corporations, Textron Inc. is a diverse collection of businesses
representing $10 billion in annual revenue. Textron's brands include Bell
Helicopter, Cessna Aircraft, Kautex, Lycoming, E-Z-GO, Greenlee and
Textron Financial Corporation. Each subsidiary is responsible for its own
day-to-day operation.
and lasting benefits. Working with J.P. Morgan to
Textron's organizational structure translated to a decentralized
receivables system. "As we grew and integrated acquisitions over several
years," said Mary Lovejoy, vice president and treasurer, "we accumulated
a collection of incompatible legacy systems. With this project, we set out
to create a centralized model to increase efficiency and reduce costs."
Working with J.P. Morgan, Textron implemented a solution that improved
its cash concentration process and served as a best practice to replicate
across the enterprise.
North American Cash Management.
implement their new network and technology,
Textron was able to immediately accelerate their
$1.5 billion in annual cash collections across the
enterprise. That in turn allowed them to reduce
their borrowing costs and days-sales outstanding.
"The J.P. Morgan team did an outstanding job with
this lockbox project," said Jon Sanborn, manager for
Providing a smooth transition to
improved efficiency
While some business solutions result in stalled
operations and employee resistance to change, that
did not happen with Textron. "All of our business
units were really excited and immediately saw the
benefits of the new system," noted Sanborn.
J.P. Morgan's nonintrusive implementation and the
ease of use associated with Receivables Edge
enabled Textron to move to its new system quickly
Challenge
Previously, Textron's receivable system relied on more than 35 domestic lockboxes at five
different banks. Furthermore, the collections activity at each of Textron's business units operated
largely independently. "The biggest challenge was our business model," said Jon Sanborn,
manager for North American Cash Management. "Textron has many business units throughout
the country. Finding a common process flexible enough to be used at every location was a key
goal. Our business units use different accounts receivable systems and have their own processes
and staffs for applying cash."
and seamlessly, enabling immediate savings in time,
money and productivity. Not only does its new
Receivables Edge access give employees real-time
access to current and archived data across the
enterprise but the reduced use of paper has also
resulted in significant savings.
Under the guidance of a Six Sigma Black Belt, Textron launched the consolidation initiative. Eight
leading domestic lockbox providers were invited to participate in an RFP process. After
completing the Six Sigma evaluation process, Textron chose J.P. Morgan as the single provider.
Key decision factors included J.P. Morgan’s record retention system, the quality of the site visit,
the implementation methodology to be used and software capabilities, such as audit notes and
event notifications.
Solution
The J.P. Morgan solution combined a national network wholesale lockbox service with Receivables
EdgeSM – the bank’s proprietary, Web-based access to receivables information, images and image
archive. As a result, Textron gained multiple benefits, including increased productivity, faster
retrieval of information and significant paper reduction.
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In time, Textron's new image-based lockbox system will facilitate the consolidation of its U.S.based nationwide receivables operations to a single Shared Service Center in Alliance, Texas. "The
new network and technology enables us to establish common processes," said Sanborn, "which is
crucial for our business."
Facilitating change as the business evolves
The new lockbox structure was readily accepted by all of Textron's business units. It was
immediately apparent how much more efficiently this new system would work. "They could see
real-time information on activities with Receivables Edge as they're taking place at the bank," said
Sanborn.
could call at any time to answer questions. "I've
Completing implementation did not mean the end of
support. J.P. Morgan provided ongoing support
across Textron’s organization with a team they
always found the J.P. Morgan folks to be very
customer focused, very responsive," said Sanborn.
"They can bring a wealth of resources to any issue."
Optimizing the number of lockboxes and
consolidating Textron's business now makes the
Implementation Made the Difference
company more ready for whatever develops as their
One of the reasons Textron chose J.P. Morgan was the bank’s approach to implementation.
J.P. Morgan's dedicated team of implementation specialists worked with Textron to ensure the
integration process was smooth and efficient.
business evolves. "I've been very pleased with a
"The key to the success of this project was the implementation manager," said Robert Hemstreet,
assistant treasurer. "J.P. Morgan assigned a person at the right level to handle a project of this
size."
The implementation manager developed the overall implementation project plan. As the project
progressed, she communicated regularly with Textron's business units and set up weekly
conference calls with key people to ensure the project stayed on track and that any issues were
quickly addressed. "In any implementation, you'll hit snags along the way, and I think a very
honest and straightforward dialogue is very important," said Lovejoy. "I would compliment the
J.P. Morgan team, who've been great in addressing those problems and dealing with them in a
very forthright manner."
Results
With the help of J.P. Morgan, Textron successfully implemented a national lockbox network and
created a common lockbox process that could be replicated across all of its U.S. manufacturing
operations. The strategic positioning of the lockbox collection sites has allowed Textron to
accelerate its $1.5 billion in annual cash collections, reducing borrowing costs and accounts
receivable days sales outstanding.
By optimizing the number of lockboxes and demand deposit accounts and consolidating the
business with a single provider, Textron can now leverage its size to realize significant cost
reductions.
The new consolidated lockbox solution provides Textron's business units with advantages such as
Web-based access to check and remittance detail images within an hour of being processed, and
real-time online access to a data warehouse with up to 10 years of stored data.
"J.P. Morgan came up with a creative, cost-competitive solution," said Lovejoy, "one that offered
us some capabilities that are taking us to a next level of performance."
JPMorgan Chase is licensed under U.S. Patent Numbers 5,910,988 and 6,032,137.
©2009 JPMorgan Chase & Co. All Rights Reserved. JPMorgan Chase Bank, N.A. Member FDIC
All services are subject to applicable laws and regulations and service terms.
J.P. Morgan team that stays one step ahead of the
game and not only solves what we know today but
also helps us think about what we may need to
consider in the future," said vice president and
treasurer Mary Lovejoy.