SALLY BEAUTY SUPPLY DOES MICR MAKEOVER IN PAYROLL WITH ACOM Solutions CHECK DISBURSEMENT SOLUTION
A few years ago, Denton, Texas-based Sally Beauty Supply adopted an expansion plan that called for opening a new store every three days. Now the market leader in the beauty supply distribution business with nearly $800 million in annual sales, the company has expanded to more than 1,800 company-owned stores domestically and abroad. It operates in 46 of the 50 states, the Commonwealth of Puerto Rico and internationally in the United Kingdom, continental Europe and in Japan.
Sally Beauty deals in products from the professional divisions of such companies as Clairol, Revlon, L'Oreal, Wella, Helene Curtis, Zotos, Tresseme, Conair, Soft Sheen Luster, ProLine and others less well known -- vending a total of more than 4,500 professional hair, nail and skin care products to a customer base that includes hair stylists, nail technicians, estheticians and retail consumers.
Growth and complexity go hand-in-hand and as the company's goals advanced, the payroll department's task of getting nearly 8,000 hourly employees and 3,000 salaried people compensated correctly and on time every two weeks grew to problematic proportions, according to payroll department manager Greg Podjan. On the salaried employee side, the problem was less serious for two reasons: first, the salaried staff was more stable, with relatively little turnover; and second, many salaried employees opted for direct deposit, eliminating the need to issue a check.
The hourly employees in the far-flung network of stores were a different story. Turnover in specialty stores like Sally Beauty's is historically high, which effectively precluded the possibility of a well-organized direct deposit program, Podjan says. Additionally, the hours each employee worked often varied from week to week, resulting in different data for each pay period.
"Nevertheless, there is no latitude in payroll," Podjan says. "Payday is on Friday, and that is when people have a right to expect their checks."
Until the department cut over to a MICR laser printer secure check disbursement solution from ACOM Solutions, Inc. in mid-1997, it was all the eight-person payroll staff could do to get the hourly payroll checks produced in time for the mailing deadline.
Hourly workers' time cards arrived electronically from the stores every other Monday. The data was processed over the next two days using Lawson payroll software running on an IBM AS/400 midrange computer, with the paychecks produced on Wednesdays on a high-speed dot matrix printer. As the checks were printed, the payroll department staff took them off in stacks, moving successively through the processes of bursting, decollating and signing, finally placing them in shipping envelopes -- one for each of the 1800 stores. The entire process had to be completed in time for a 4:30 p.m. two-day air shipment deadline -- still the case, but now well under control.
One of the new payroll manager's assignments was to improve the check distribution system and, if possible, introduce greater speed and some new economies into the process. Exploring MICR laser printing solutions, he found that he could improve the image projected by the checks as well. "Sally's checks were not pretty," he says. "As the ribbon starts to fade the checks begin to degrade in appearance, and they begin to look a little ragtag."
"The chief considerations were fourfold," he says. "In addition to the increased security afforded by a comprehensive MICR laser check disbursement system, we needed it to be at least equal in speed to what we had been using and if possible, faster. We hoped to effect some economies by using secure blank check stock rather than print and maintain a sizable inventory of check forms. And finally, we felt we could achieve significant improvements in efficiency by eliminating some of the processes that were involved in the check run.
Podjan sought a complete solution because, he says, he did not want to have to piece one together. To facilitate his search, he contacted a number of Lawson Payroll software users, one of which was a Fort Worth company that had purchased a complete MICR laser check disbursement system from ACOM with extremely positive results. He also considered solutions from Moore Business Systems and others, settling on the ACOM solution because it appeared to offer both the lowest initial price and the most economical downstream operating costs.
The solution Podjan selected for Sally Beauty consisted of QuickCheck/400TM MICR check disbursement software system, two MICR-enhanced, 24 ppm laser printers and the QuickCheck software enhancement for issuing W-2 forms. His total investment, he says, was less than his $20,000 monthly postage bill.
QuickCheck helps to prevent
check fraud while substantially reducing check disbursement
costs. Significant economies are achieved in a number of ways:
- by eliminating inventory of preprinted check and/or form stock;
use of less expensive safety paper;
- by eliminating the need for bursters, collators and signature
stamps;
- by reducing personnel time for check production, correcting
duplicates and locating missing check numbers;
- by eliminating the need to align and test checks prior to each
run;
- by eliminating the need to void check numbers in case of
printer malfunction; and
- through the ability to set up a new bank account and print
checks on it in minutes
- It works with all financial packages and allows activation of
add-on features in seconds.
QuickCheck also offers several advanced security features, among them the Positive Pay check verification system; a Reverse Image Font; the ability to specify dollar limits for printing one, two, or no signatures through Signature Control; Front Panel Override, which forces the printer to print only a single page even when configured for more; and Security Reporting, which allows the designated security officer to print detailed audit reports ad hoc.
QuickForm, a companion system to QuickCheck, is a versatile, easy-to-use, forms creation software system that functions as a MICR-enabled front-end design tool. Available for both the AS/400 and the Microsoft Windows environments, QuickForm provides WYSIWYG forms design; autoconversion of scanned forms; advanced design features; optimized print speeds; forms storage; and graphics import/merge.
"We purchased the system in April 1997 and went live in May," he says. "We found the ACOM solution to be almost 100 percent compatible with the Lawson software. We experienced one small problem in the AS/400 printer layout -- a line from each check stub would spill over to the next check -- but the problem turned out to be in the software, not in the ACOM system.
The only problem that concerned the ACOM system had do with a small run of 61 checks that went to Puerto Rico, where the bank said it was unable to read the MICR.
"The solution was simple," Podjan says "We simply go into the software and toggle it over to the impact printer for these few checks."
While ACOM offers Positive Pay as part of the solution, Sally Beauty already had it in place as part its arrangements with its two banks, Wells-Fargo in California and Nation's Bank (Atlanta) for the rest of the country.
"Positive Pay is important," Podjan says. "We have had forgeries and with Positive Pay, they are much less likely because among other things, it counters the generation of duplicates. We send a file of checks written to the bank for cross-checking. When a check is presented, the bank can check the list and if the individual has the proper identification, he or she gets the money."
Using the ACOM system, the bursting, decollating and signing processes have all been eliminated (with the exception of the Puerto Rico run). Now, only two steps are involved: printing and sealing. A single pass of blank stock through the printer produces the complete form and report, with the signature included automatically.
All printers jam from time to time and Sally Beauty's MICR printers are no exception, but, Podjan notes, they have the sophistication to detect how many checks have been ruined and to reprint them automatically once the jam is cleared.
"One of our early concerns," Podjan says, "was that sending checks that were sealed in an envelope would get torn up. So in April, we sent an e-mail out to all the stores telling them that the checks were going to be different, that they were in self-sealed envelopes and that they should advise their employees to read the instructions on how to open the envelopes. We also held a seminar for 300 district and territory managers at a quarterly management seminar, demonstrating the new procedure. The result: not a single report of a torn check!
Most importantly, all of the company's objectives have been met. The system produces 2,880 checks per hour permitting the full run to be completed in less than two and one-half hours. Podjan starts the longest, least complex run remotely from his home at about 7:00 a.m., and by the time the office opens, there are a sizable number already printed and ready for the sealer. The checks sealed and ready for the mail by lunch time.
And where before, there were eight people working frantically to complete the process, there are now three in the printer room including Podjan, whose role, he says, "is to push a button."