Anticipation
For Plymouth-based Solutran Customized Payment Solutions, fast growth came because executives had a plan, anticipated a change in the industry and made sure employees worked to the best of their abilities.
While the provider of treasury management systems had always seen steady growth, filling a specific need for customers with a high volume of low-value transactions, the real boost came when the company prepared itself to jump on the electronic revolution. It was a move it had anticipated and worked for and one many competitors made too late. The result is that Solutran is now one of the country’s leading providers of treasury management systems.
“We saw huge opportunities in a lot of different areas, especially electronically, and we made sure we took advantage of them,” says Joe Keller, 38, president and CEO. “That’s something we do every day. It’s what’s helped us get where we are today and that strategy helps us to keep growing.”
Founded in 1984, Solutran has grown close to 30 percent a year in the past three years. The company now has about 75 employees, 220 clients, eight affiliate processing centers throughout the country and revenue of about $11.5million. And Keller expects the company to grow about another 30 percent in2003. The reason, he says, is a willingness to be innovative and then carryout ideas, a concept that goes back to Solutran’s roots.
Solutran was founded as a third party processing firm by former Carlson Cos. executive Elloyd Hauser, who had spent years in the fulfillment industry. When national legislation forced the Federal Reserve to become self-sufficient, it had to start charging companies and customers for processing, meaning company costs went through the roof. This opened the door for companies like Solutran to focus primarily on providing these types of processing services.
Solutran immediately became a leader because it focused on a niche, serving larger companies that have a high volume of low-value checks to process, such as direct marketers, publishing firms, consumer product manufacturers and fund-raising organizations.
Solutran provides customized systems to these types of companies to help them clear checks in the $1-to-$100 range — checks that are typically too small for banks. Industry officials say the benefit of working with a company like Solutran is that they will typically charge a company less per check cleared than a bank.
Nevertheless, because Solutran has targeted big-name customers, the company often finds itself competing with major banks and other big third-party processors, a constant challenge in the industry.
“It’s really a David-and-Goliath tale,” Keller says. “We compete against the big players and that forces us to stay innovative and to try and anticipate the next big thing.”
That’s what Solutran did in 1998when another national act allowed for paper checks to be converted to electronic payments. The move opened up a whole new industry for Solutran that now makes up about 60 percent of the company’s overall business. But the success only came because Solutran officials anticipated the change happening and prepared the company for it.
“Electronic payment processing has really been the springboard for our growth and it only happened because we were ready for it,” Keller says. “As soon as that legislation was passed, we were out targeting big customers.”
With the electronic side, Solutran once again acts as a clearing house, working now with major retailers to convert paper checks from customers to electronic payments. Then, using the Automated Clearing Houses (ACH)network, Solutran clears the checks, resubmits checks that initially won’t clear for whatever reason and tracks customers that are writing bad checks.
This electronic move has opened the doors to the retail industry for Solutran, thus boosting its customer base. In just a few years, Solutran has landed contracts with such major retail chains as The Kroger Co., Supervalu, J.C. Penney, CVS Pharmacy, Holiday Cos. And Regis Corp.
Quick turnaround
“We wanted someone who could turnaround and handle these transactions quickly and effectively and Solutran was right there, ready to go. And because the company is so cutting-edge and flexible, they were able to give us what we needed,” says Kyle Didier, vice president of finance for Regis Corp. Regis has worked with Solutran for the past three years. “There are bigger organizations that could do this, including the banks, but we didn’t want cookie-cutter service. We wanted someone who could understand and work with our specific needs. The Solutran guys are sensitive to that and knowledgeable about the industry so we got results.”
Says Michael Houston, a marketing professor and expert on retail trends at the University of Minnesota’s Carlson School of Management: “The retail industry, like any other industry, is constantly looking at outsourcing options, especially with services that they don’t necessarily want to focus time and resources on. That’s true for many financial services and that leaves a lot of opportunities for smaller firms.”
Solutran has an advantage because it broke in early, and execs encourage employees to stay open to change and to work on building lasting partnerships with companies big and small.
Another key to the company’s success has been strategy. Right from the start, Keller says, the company has targeted upper-tier companies with high volumes. Plus, Solutran has focused on building a niche, simply providing this one financial service so as not to take on too much.
Solutran officials spend a lot of time talking with customers about the benefits of working with them rather than the big banks. And while federal regulatory changes have thus far helped the firm, there is always a concern that regulation could change and affect the business. Still, Keller says all Solutran officials can do is work as hard as they can and stay ready for anything.
Keller wants the firm to continue its growth, especially in the electronic conversion field. And he wants to bring on new customers, encourage new ideas and stay ahead of the game, while always remembering what got them here.
“I would say our biggest accomplishment is that we’ve been able to grow somuch while hanging on to our core values and not changing our culture,” Keller says. “We’re committed to building relationships, working ethically and turning a profit and those values are abig part of our daily work. I think they’ve been key in getting us where we are. Well, that and a little innovation.”
jkeller@solutran.com
