Image lockbox unlocks new level of financial benefit.

Movado Group Sees Technology as a Clear Differentiator

Lockbox continues to be the main collection method for wholesale business in the United States. But while traditional wholesale lockbox solutions tend to provide similar advantages around cost savings and efficiency gains, a few banking providers are differentiating their offerings by integrating the latest image and Internet technologies. Today technology-enhanced lockbox capabilities are delivering a new level of financial benefit to lockbox users and serving as a springboard for companies to reengineer their receivables processes for even greater gains.

Building on Tradition with Technology

Most companies are already aware of the common benefits of a traditional lockbox service. These include improved funds availability, lower cost, increased efficiency, enhanced control and improved client satisfaction. First, a nationwide lockbox service with local processing capabilities can reduce float around mailing, processing and clearing times to accelerate the receipt and application of cash. Second, outsourcing check collection processing to a bank can standardize processes, normalize cash flow and eliminate many administrative tasks associated with collections, thereby lowering costs. A lockbox solution also improves internal controls around the accounts receivable process by segregating the deposit function from the posting function. Finally, a company can improve client relationships by speeding the closing of receivables, which in turn enables a timely release of goods and reduces customer inquiries.

Movado Group Enhances Performance with Image Lockbox Solution

Movado Group, Inc. is a designer, manufacturer, and distributor of quality timepieces marketed under five distinctive brands--Movado, Concord, ESQ, Coach and Tommy Hilfiger. The company's watches are sold worldwide through department stores, retail and independent jewelers, and its own Movado boutiques. Movado's corporate office performs the collections function for the U.S. wholesale business.

As part of a broader strategic effort to reduce operating cost and enhance efficiency, Movado selected JPMorgan's nationwide wholesale image lockbox service to replace its existing lockbox arrangement. Most of Movado's business involves manual cash applications, and the company was looking to automate the process. Towards this end Movado is taking a phased approach to its lockbox implementation. Movado has implemented JPMorgan's ILIAD[R] online image browser under phase one. Next the company will move to direct image transmission, whereby it downloads and archives images in-house. The last phase will involve data capture from the remittance itself and direct cash application.

According to Joe Bosch, Movado Group's Manager of Treasury Operations, time efficiency has increased by at least 100% already in the solution's first phase. Before, checks and remittance data would arrive by courier the day after deposit, and cash application would take an additional two to three days. Now Movado sees images within two hours of deposit and completes cash application the same day. Staff time devoted to the posting process has been reduced from four people spending eight hours a day to just two people focusing fours hours per day. Another immediate benefit has been increased posting accuracy due to image clarity. Less exception items mean fewer problems to solve.

When choosing a solution Movado had carefully assessed the potential economic efficiencies it could gain. Notes Frank Kimick, Vice President and Treasurer for Movado Group, "From a treasury standpoint, the lockbox solution enables us to eliminate information float inherent in our internal system and gain efficiency, which has enhanced our department's financial performance." Better control over the lockbox workflow enables Movado to make a more timely use of funds. Adds Bosch, "We have reduced DSO by at least one day or more and have delivered additional cost savings." Bosch cites the elimination of the need for onsite and offsite paper storage and the elimination of courier charges--which cost up to $25 per day, depending on package size--as examples.

But Bosch notes that beyond direct economic benefit the solution has also positively impacted service quality. "Today clients can decide whether to go with your company based on customer service. Besides reducing DSO, the solution has supported our efforts to strengthen customer relationships. Same day image access puts full details in the hands of our customer service staff and enables them to release orders that normally would be placed on credit hold. Same day processing also keeps our accounts up-to-date, which means our client statements are more accurate. This dramatically reduces calls from our customers and helps our collectors to be more efficient."

"JPMorgan had great customer support staff that walked through the processes with us. It made our staff more comfortable with the solution that much quicker," says Bosch. Movado expects to progress to phase three within six to eight months and then to quantify the full extent of savings realized.

Kimick notes that technology was a clear differentiator in choosing JPMorgan's solution. "JPMorgan delivered a high quality product and made Movado comfortable that their solution would help take us where we want to be." Adds Bosch, "The product's quality, accuracy, image visibility, data search and query capabilities, storage options-in all of these aspects JPMorgan's ILIAD[R] online image browser was better than the competition."

For more information regarding JPMorgan's nationwide image lockbox network with processing sites in Atlanta, Chicago, Dallas, Los Angeles, and New York, contact Dennis Lade, Vice President, JPMorgan Treasury Services at 212-552-2532 or at [e-mail]