With the addition of virtual deposit capabilities brought about by Check 21 legislation, depositing a corporate check at a physical bank branch is quickly going the way of the wind.
Given back-office efficiency gains and resulting cost reductions, remote deposit functionality is now a standard cash management product, which has been adopted swiftly by the corporate community.
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Hundreds of financial institutions now deliver a simple solution, giving companies the capability to deposit check images electronically from the office.
Using a PC, scanner and software, companies may transmit via the Internet digital images of checks, money orders and government warrants to their bank. The encrypted Internet connection ensures the information is secure by protecting the integrity and confidentiality of the deposit data.
Many providers also offer report functionality that tracks detailed transactions and summary activity while offering online images archive and retrieval capabilities.
But remote deposit solutions continue to evolve beyond the virtual deposit function. Most notable is the opportunity to automate client receivables postings. Progressive bank providers are automatically capturing and reconciling remittance data for direct receivables application, while virtually negotiating the check.
All businesses can benefit from this enhanced approach to remote deposit.
One company that uses remote deposit technology is Warwick-based, Tuition Management Systems, a company that for the past 20 years has partnered with colleges, universities and private schools to help make education more affordable for their students and families.
“We utilize remote deposit as an effective complement to our existing external lockbox provider for items that require special handling,” said Craig Lockwood, the company’s chief financial officer. “We expected and received workload savings associated with filling out deposit slips and transit to the bank for deposit. It also has helped streamline our internal workflow by facilitating the exchange of payment information from the individuals processing deposits to those posting payments.”
For all companies, virtual deposit offers the following as well:
Deposit flexibility: Transmitting check images electronically eliminates the travel time and courier costs associated with a physical bank deposit, improving staff productivity.
Enhanced cash flow: Timely deposits free up working capital. And funds availability will continue to improve as physical check image copies (Image Replacement Documents or IRDs) are converted to full electronic presentment to the payor bank.
Timely reporting: Companies can upload deposit data from the remote deposit process into accounting software packages, resulting in timely receivables posting and more accurate credit management.
Fewer Banking Relationships: With remote deposit, bank geographic boundaries disappear. Consequently, there is less need to establish non-strategic, local bank relationships. As a result, companies can realize lower bank fees.
Given ever-present market pressures, premier cash management providers will continue to offer advanced transaction technology that is flexible, scalable and customizable to the client need. The goal is to continue to further automate labor-intensive tasks involved in the processing of financial documents, not just checks.
Leaders in cash management are expected to offer enhanced technology to reduce data entry requirements and costs, increase the accuracy and speed of data capture, decrease paper storage needs and improve client service, given the immediate electronic access to data and images.
Dan Hartnett is a vice president in the cash management department of Citizens Bank of Rhode Island.
