Inside Heartland Co-op.

How a growing, farmer-owned cooperative transformed its AP operations.

Heartland Co-op’s story is one of steady growth.

The farmer-owned cooperative got its start in 1987 through the merger of three co-ops, just a short drive from each other in central Iowa. More than 25 mergers and acquisitions later, Heartland Co-op now serves 5,800 members at more than 80 locations across three states.

Today, from its base in Clive, Iowa, the co-op offers an increasingly diversified set of businesses. Along with its core grain operations, Heartland has expanded into energy, agronomy and feed operations — delivering fuels, supplying fertilizer, seed and crop protection products, and producing its own brand of feed.

While Heartland was expanding its member services and footprint, some internal processes lagged behind. Even as invoice volumes grew, the co-op’s two-person accounts payable team continued to manually enter invoices into the accounting system for coding, review and approval.

“Running payments were both time-consuming and disruptive,” said Kathy Johnston, accounting manager for Heartland. “Because our system required payment batches to be created in a single, uninterrupted process, we had to temporarily block access to the system while approved invoices were pulled for processing,” she explained.

Checks were printed and prepared for mailing. Because of the time involved, Heartland typically ran checks only once a week, usually on Fridays.

Shifting expectations.

As the co-op grew, Johnston saw pressure coming from two sides: internal staff stretched thinly by manual processes and external partners pushing for faster, more reliable ways to get paid.

“Times are changing,” Johnston said. “Fewer people want checks. They don’t want to wait for them.”

Heartland did use a credit card for some expenses, but sharing a single card number across potentially hundreds of vendors created ongoing fraud issues and frequent card replacements. ACH payments were another option, but the setup process was slow and manual.

So, when Commerce Bank suggested a payment cycle review to identify ways to simplify payments, Heartland was ready to listen. The co-op was already familiar with Commerce, having worked with the bank for years on equipment leasing and other financing needs.

“We knew our invoice process was outdated,” Johnston said. “And we trusted Commerce to help us find practical ways to improve it.”

Payment Cycle Review.

The 2024 review brought the CommercePayments^® team together with a cross-section of Heartland’s finance team, including product accountants, expense accountants and credit staff. Over the course of a full-day session, the group walked through every step of the process — from receiving an invoice to final payment — mapping out where work slowed down, manual effort piled up and risk was introduced.

“It was very much a team effort,” Johnston said. “Our utility bills are processed differently than our product invoices, so we needed everyone at the table.”

In the end, what stood out to Johnston wasn’t just the bank’s recommendations, but the approach the CommercePayments^® team used to guide the discussion. “There was no pressure,” she said. “After listening to our challenges, they laid everything out for us. We could choose the pieces that made sense for us.”

The result was a phased implementation that introduced new payment methods, reduced manual work and gave the finance team more time to focus on higher-priority tasks.

Simplifying payments.

Based on the review, Heartland began rolling out a set of solutions in July 2024 that have transformed how the co-op handles payments.

The first step was adding the CommercePayments^® virtual credit card to its mix of payment options. The use of one-time cards reduces fraud risk tied to shared card numbers while also generating a monthly revenue share based on payment volume.

“Commerce saved us time by taking on the responsibility of vendor outreach — contacting our suppliers directly to encourage adoption of card payments and handling ongoing enrollment,” Johnston said.

That effort paid off quickly. Heartland has seen nearly a 75% increase in vendors enrolled in AP card payments, compared with a previous AP card program. And CommercePayments^® continues to enroll an average of 11 new vendors each month. The team also enrolls vendors that request ACH payments.

Adding a payment hub.

Next came the CommercePayments^® Payment Hub, an automated payment portal that makes it possible to pay suppliers using their preferred payment method — virtual AP card, ACH or check — from a single payment file. Prior to its implementation, Heartland had to separate vendors by payment type, pull different files and then mark payments as complete in multiple places.

“Our best shot at keeping track was a spreadsheet,” she said.

Now, all payments flow through a single process. Heartland sends one file, and Commerce handles the rest.

“Once we pull the payments, the file goes to Commerce and we’re pretty much done,” Johnston said. “They print the checks, send ACH payments and issue the virtual cards, delivering remittance information electronically.”

That last point made a significant difference. Previously, vendors paid by ACH or card often didn’t know which invoices were included in a payment, leading to follow-up calls and reconciliation headaches. Automated remittance eliminated that confusion.

“It saves so much time,” Johnston said. “Now we actually have time to focus on internal reviews, controls and other important details.”

Expanding control with purchasing cards.

Most recently, Heartland acted on a CommercePayments^® recommendation to expand the use of purchasing cards across the organization. AP staff now use the cards for fast-turnaround utility payments, while the sales team relies on them for travel expenses and supplies. In addition to simplifying expense management for employees who are frequently on the road, the cards generate a monthly revenue share.

Those numbers add up — and, like the co-op itself — they are growing. Heartland’s total revenue share rose nearly 50% from the first six months after rollout to the most recent six-month period. The payouts also arrive faster.

“Before, the rebates arrived as a year-end distribution,” Johnston said. “Now we see monthly cash flow from the AP and purchasing cards, which make a big difference for us.”

A relationship built on access.

For Johnston, the operational improvements and rebates matter — but relationships matter just as much.

“I don’t have just one contact at Commerce. I have seven or eight people I know by name, and they know me,” she said. “I can reach out to any one of them, and they respond. I am not pushed from one person to the next.”

That contrasts with her previous experience, where customer support meant dialing general numbers and being routed repeatedly without resolution.

“With Commerce, there’s constant, ongoing communication,” Johnston said. “They help me. It’s personable. And they want us to succeed.”

CommercePayments^® solutions are provided by Commerce Bank.