Check Deposits at the Speed of Light

By Frank Nuck, Financial Control Solutions

So the mail just arrived and a large stack of checks is staring at you, just being to be taken to the bank. Only it’s mid-January in Wisconsin, it’s been snowing for eight straight hours, and there is no way you want to go outdoors, especially to fight traffic and the weather just to go to your local friendly bank (they’re nice, but not that nice) just to deposit checks. Unfortunately, the other stack of paper staring at you, are your bills, so suit up and go. How bad can it be?
But what is you could deposit those checks from the warmth and protection of your office? No weather, no wear and tear on your vehicle, no hourly labor just for the trip, no potential theft, or heaven forbid, the threat of car accident. With a recent change in federal banking regulations, you can do just that.

Up until about two years ago, non-retail operations were not permitted to electronically deposit checks from their office. Scanning checks per se is not new. The national Automated Clearing House (ACH) system has provided an electronic highway for checks as well as other automated payment related transactions for many years now. It took a change in federal regulations, however, to allow general business offices to take advantage of the highway for check deposit. The question is whether it makes sense for your office, and the first place to look may be your bank statement (the challenges of Wisconsin winters not withstanding)

Generally speaking, when you set up your banking relationship, you knew that you would be paying baking fees, though most people when asked would be hard-pressed to remember what exactly they pay on a monthly basis. And different banks fee their customers differently. In fact, I would wager that if you pulled your last checking account statement analysis – if you actually receive one – how you are charged and what you are charged may be anything but clear. Besides, if you are paying $.12 per check and $.35 per deposit, how costly can it be? On the other hand, if you could reduce those costs while eliminating the trip to the bank and have your checks clear in no more than 24 to 48 hours, why wouldn’t you?

“Accounts Receivable Conversion” (ARC) is the jargon used by the regulatory body that governs the ACH system – National Automated Clearinghouse Association – that refers to converting the paper check into electronic text capable of being sent through the ACH system. This process should not be confused with the so-called “Check 21” legislation that took effect this year and requires banks to utilize an infrastructure different from that provided by NACHA.  Check 21 (the “Check clearing for the 21st Century Act”), spawned by the holdup-in check transfer that occurred when federal aircraft were grounded following 9/11, transfers images rather than text. As an aside, people are still speculating whether Check 21, which provides for faster check clearing, will require more, less or the same fee structure as accompanies the use of the current NACHA system.

ARC is a very straightforward technology and application. Utilizing software accessible by your PC, your office would simply scan checks to create a batch, run a tape total to match the batch total, press a button and zap. Your check information is digitized and routed through the ACH system. In some systems, once you enter your patient information the first time, then every subsequent time you scan a check, you only need to key in the date and amount. No bank trips. No deposit slips. Rapid clearing. And, depending upon compatibility, you may be able to import the check data into your billing system.

Cost-justifying ARC is highly idiosyncratic to a particular office. A full-blown analysis should examine quantitative issues such as your current banking fees, labor costs for preparing deposit slips and bank-trip charges, all of which should be properly burdened with real overhead numbers. You can imagine that the comparative cost structure is significantly different if your office is upstairs from your bank, or if you have to drive through a gauntlet of terrain and traffic obstacles to get to the bank, or if your offices are large with a corresponding burden rate. However, the cost justification should be relatively straightforward once you can decipher your actual banking costs.

Given the advent of Check 21, there is more uncertainty about the future of banking-related fees and banking-related activity, but also more options. ARC can provide a cost-effective alternative to your current check management methods while offering the speed promised through Check 21.

For more information about Remote Deposit Checking, contact Financial Control Solutions.