Case Study: National Auto Care Improves Claims Settlement
While the general definition of what a purchasing card is used for has not changed from its inception, innovations and new technology are challenging the conventional belief that cards must only be used for low-dollar, high volume transactions. Yet, organizations are realizing new ways to improve their traditional payment transactions. For example, National Auto Care, an Ohio-based vehicle-service agreement provider, utilizes the cutting-edge technology of a new card program offered to handle its new claims and payment process.
PNC Bank’s ActivePay card, powered by Works, Inc., offers an online payment product to organizations of all types – from manufacturing, retail, insurance and service companies to utilities, government entities and others – to safely and securely expand commercial card programs beyond traditional limits. For National Auto Care, the online tracking and reporting system has replaced reconciliations and paper repair orders related to claim payments made to non-affiliated dealers and repair facilities.
The card utilizes Works’ integrated online payment solution that connects payment management with Visa’s global payment network. This simplified and automated process implemented by National Auto Care demonstrates how commercial credit cards are becoming a preferred method of payment for settling warranty claims. ActivePay cards are enhanced through Web-based technology by giving companies control over the cardholder’s spending by electronically assigning each card a specific credit limit corresponding to the payment to be made.
National Auto Care, which processes as many as 5,300 claims a month, assigns each claim to an ActivePay card number when either a repair shop or auto dealership requests approval for repairs covered under National’s vehicle service agreements. The company can electronically document the service center name and the type of approved repair, and assign an exact dollar amount to that specific credit card number to establish an appropriate credit limit. When the credit card payment transaction is submitted by the repair facility, the ActivePay card system reconciles or matches that information to the approved claim amount. The claim is automatically processed through National Auto Care’s claims system if the service center name, repair type and dollar amount match; exceptions are manually reviewed. Through the program’s electronic efficiencies, National Auto Care maintains the same or better controls than those in place with the traditional paper-based payment environment.
The new credit card-based claims handling and payment process has produced numerous benefits for National Auto Care, such as reconciling to the dollar and improving efficiency, said Peter J. Biscardi, National Auto Care President.
“This proficient model for processing claims allows us to minimize the risk of fraudulent claims, reduce time spent manually matching exception items and quickly resolve payment issues because of online reporting and tracking,” Biscardi said. “Through this innovative technology, we are able to provide additional services to our dealers and clients, who benefit through reduced or eliminated accounts receivables at the repair facility and the dealership, with payments made within an hour from when the service was provided.”
The process also allows National to change the dollar amount assigned to a specific claim number directly from its office computer if a service center requests additional repairs. However, if a vendor submits a claim for a cost or repair that is not pre-approved, the system kicks out the claim as an exemption, protecting the company from errors or potential fraudulent charges. Use of ActivePay also allows your company to achieve the following:
About 55 per cent, or 3,000, of National Auto Care’s client payments are submitted through the ActivePay program, compared to only 20 per cent that were paid via credit card prior to the new system, according to Jim Morris, vice president of accounting for National Auto Care. The increase can be attributed to the satisfaction of National Auto’s clients, who are paid the same day the bill is sent.
Now that National Auto Care has reduced paperwork and improved efficiencies from the use of ActivePay, the company freed up time to take on additional claims and customers. Morris expects National Auto Care, which has clients throughout the United States and Puerto Rico, to begin absorbing growth, gradually increasing to 7,000 claims a month.
This technology for processing claims sets a new standard for the nation’s insurance industry, which is challenged by the sheer volume of claims submitted each year. But, the technology is practical for virtually any business because of its ability to restructure and modify business processes through state-of-the-art data management, and increase control over employee spending via pre-purchase approval and readily accessible information. Businesses have also found that cards minimize risk of overextended budgets using online tools to monitor budgets and more quickly trace purchases; reduce the need for paper purchase orders by automating the request and approval process and the post-purchase reconciliation; and simplify administrative duties and reduce accounting errors through integrated accounts payable files and data management.
Once the request has been routed through your company’s approval hierarchy, your employee’s credit limit is instantly adjusted with the new approved amount and the purchase can be made immediately. After the purchase has been made and the transaction reconciled, any remaining funds are automatically removed from the card. As a result, a broad range of employees can hold cards with various credit balances, including zero credit balances, that can be dynamically adjusted based on their individual purchasing needs.