California State Automobile Association

The Challenge

The insurance division of AAA of Northern California, Nevada and Utah, also known as California State Automobile Association’s Inter-Insurance Bureau (CSAA), was approached by one of its vendors offering a discount for consolidating service invoices into one daily electronic payment.

The claims department issues thousands of checks daily, with several vendors submitting individual invoices for each customer for work performed. The proposal to consolidate the individual invoices into one daily payment, and process the payment via ACH (Automated Clearing House) aligned directly with CSAA’s commitment to reduce operating expenses. The proposal was quickly accepted and work began to design an electronic process to support the proposal.

CSAA’s Claims Information Technology Department was charged with the mission of finding a system that would capture payment requests and create a daily bundled ACH payment for each vendor. In addition, CSAA needed the solution to integrate with its legacy mainframe system. It was important that the solution chosen require minimal changes to existing applications.

The Solution

CSAA took its requirements to three software vendors. One of them, Prelude Software, offered all of the functionality CSAA required. Prelude’s PayPilot solution easily integrated with the systems already in place, utilizing existing workflows and incorporating CSAA terminology.

Taking advantage of PayPilot’s flexible architecture, it was easy for the Prelude team to complete the implementation within the targeted project deadlines. Prelude’s team listened carefully to CSAA’s requirements and was able to configure PayPilot to accommodate CSAA’s needs. Prelude added all the functionality CSAA identified in a bundled solution that has proven a cost-savings benefit to both CSAA as well as their vendors.

The advantages of Prelude’s solution include:

Issuing one consolidated payment in place of hundreds of checks.
Distributing consolidated payments by check or ACH payments.
Incorporating all relevant payment details in remittance advice and electronically transmitting the remittance for ACH Payments (ERAD).
Including insurance-specific functionality.
Managing and issuing payments from one platform.

“We found Prelude’s team easy to work with and very responsive. We had requirements unique to our systems. The Prelude team offered helpful ideas and were able to give us the features we required.” said Linda Pietraczyk, CSAA Project Manager.

Prelude’s initial task was to integrate its PayPilot solution with CSAA’s legacy mainframe claims system. PayPilot is designed to seamlessly integrate with existing systems using information from many applications. Its database architecture provides a single platform to manage and issue all payments, allowing for easy migration from printed checks to electronic processing. Checks can be printed or electronic payments made based on vendor preferences. PayPilot was configured to capture the claim payment information necessary to consolidate and report on the bundled payments being made to vendors each day.

The Results

“The implementation went extremely well. We have a testing process in house that every new software solution must pass, and Prelude’s project team worked closely with our team to successfully complete testing on schedule. Once we signed the contract we were assigned a team of engineers and support people to answer questions and help us handle the requirements that evolved as the project got underway. The Prelude team was responsive and dedicated to quickly finishing the project and met all deadlines and project expectations.” said Rick Goddard, of CSAA’s technology department.

“We were happy to answer questions as the system was installed and helped to train users as the implementation was rolled out,” said Dolores Wood, Prelude’s Account Manager assigned to CSAA. “Our teams worked closely together to transparently incorporate the desired functionality as the scope of the project evolved. The installation required Prelude’s solutions to communicate with multiple CSAA systems, so we collaborated with numerous departments throughout the course of implementation.”

Several factors of the Prelude approach contributed to the overall savings achieved:

Payment/transaction costs were significantly reduced.
A consolidation discount was negotiated with a major vendor.
Handling and mailing costs decreased for checks.
Processing costs for remittance advice were lowered.

US Banks agree that US businesses typically spend between $7 to $10 per payment processing checks.

By switching to electronic payments, CSAA has reduced processing costs to less than $1 per transaction (whether it is a single payment or a consolidated payment.) The CSAA team is surprised at the number of vendors that have signed on to receive consolidated payments electronically. Automating the manual process, improving service partner relations, and accruing significant cost savings have made the CSAA-Prelude relationship a win-win-win solution.