By Marylou Doehrman
U.S. Bank is taking advantage of legislation that took effect in October – Check 21 – the Check Clearing for the 21st Century Act – allowing banks to use digital imaging in the processing of checks. Sending banks photograph incoming checks and transmit the images electronically to the receiving banks, saving time and eliminating the costly transportation of paper checks.
U.S. Bank commercial customers can now take advantage of a side benefit of the legislation offered through On-Site Electronic Deposit. Commercial customers can purchase (leasing options will be available in the near future) scanning machines and software from U.S. Bank that enable them to electronically deposit checks received from their customers at a drop box, via the mail or in person. The checks are scanned on site and electronically transmitted to U.S. Bank for deposit into the commercial customer’s account.
The check-clearing act paved the way for innovative, business-friendly programs, like the one at U.S. Bank, that streamline a company’s or organization’s check processing and accounts receivables process.
Steve Jamieson, the vice president of U.S. Bank Treasury Management Services based in Seattle, said the bank’s program is a direct result of the legislation. “It’s taking what was allowed under the provision of the bill and allowing us to do business better,” Jamieson said. “The check image now has the same legal standing as a physical check to be honored by all banks.
“In today’s world, when a customer receives a payment that is either mailed or dropped into a box at their window, the checks have to be totaled and payment applied to the accounts receivables. Then, someone has to make a physical delivery to a bank, including out of state banks.” With the new electronic deposit program, Jamieson said the primary advantage is a “quicker and easier process.”
Depending on internal procedures, he said a company’s paperwork could significantly decrease, but the check float time and employees’ labor hours definitely diminish with real-time processing.
“This process eliminates the need for someone to take the checks to the bank,” he said. “It saves costs when employees don’t have to be hopping back and forth to the bank.”
The savings to the business is about employee productivity, said Tom Naughton, the U.S. Bank regional president for southern Colorado. For now, he said the electronic deposit process appeals to a specific group of commercial customers, like wholesalers, doctors’ offices or other businesses that process multiple checks. “Look at the time dedicated to processing the receivables – the man-hours devoted to that process and the driving time,” Naughton said. “It is worth investing in, if it speeds up the process of collecting receivables. You could save a considerable amount of money.”
A business can save space, too. The scanning device captures the image of everything written on the check. “You could simply burn a CD and save that.” The program also offers a returned check management feature, which, according to a U.S. Bank news release, “provides business customers with robust online reporting and value-added returns services, such as a service fee collection and quality customer service.”
Naughton said the electronic deposit process makes it easier for business owners and managers to be the “captains of their own time.”
The electronic deposit program was introduced to the Colorado Springs business community the week of February 1, and Naughton said some companies have expressed an interest. “We are just now ramping up,” he said. “It’s still in the infancy stage. People have to assess their situation, and do a cost analysis based on that situation.”
Once digital imaging in banking is up and running and commonplace throughout the industry, opportunities will be open to all customers, Jamieson said.
He and Naughton said that check digital imaging industry-wide is a gradual process. “I don’t think it will be a full-blown product for five years,” Jamieson said. “The legislation was an enabling legislation; it didn’t build the infrastructure, it just put in place the capability to do so. U.S. Bank has the infrastructure, and we are building on it each day.”
“It’s the world of image exchange,” Naughton said. “You are taking this (the image) and putting it into a different medium to speed up the process. There are technologies to facilitate that – it’s about customer convenience.”