Ancillary Collection Services
December 9, 2008 – 6:53 amVarious other collection services supplement wholesale lockbox, and must be considered by any company reviewing its cash management system.
Retail Lockbox
Some banks offer a totally electronic data capture environment, usually referred to as retail lockbox. Processing equipment scans the MICR line on checks and the optical character recognition (OCR) line on remittance documents, automatically providing lockbox detail. Because there is minimal operator intervention, the workflow is efficient and inexpensive. (OCR is an alternative technology for automated character scanning that is often used on retail invoices.)
Banks have found it difficult to make their target profitability returns on retail lockbox, due to the extensive investment in equipment and the low price that is typically charged for the service. As a result, many banks no longer offer retail lockbox. Companies have the option of using the services of specialized retail processing vendors such as EDS, GTE Processing, and NPC. Although the vendor deposits processed checks at a local bank, there is some exposure to the company during the intraday period before the bank receives the deposit.
Imaging
Imaging is a technology that permits the digitized scanning, sorting, cataloging, and retrieval of paper documents, including checks, remittances, envelopes, and correspondence. Several banks acquired imaging equipment for a few selected uses, including various disbursement services (see Chapter 4), and have extended the technology to such other applications as lockbox. Images can replace the labor-intensive process of handling wholesale lockbox items, while increasing the flexibility of the data captured and the scope and speed of receivables information transmitted to the company.
Taken From : Essentials of Managing Corporate Cash
