Summary of 2008-2 Check Clearing Study
Clearing Times Continue on Downward Path

The 2008-2 Clearing Study, conducted in September, recorded the impact of increasing image presentment as clearing averages fell once again. For lockbox deposits (higher dollar amounts into lockbox operations), the amount of clearing reduction for city points and RCPC points was consistent with the previous survey, and city points fell a slight 0.02 days faster than RCPC points .

For teller, so-called “over-the-counter” (OTC), deposits of smaller dollar items, city points fell more rapidly than they had in the previous survey (0.07 days faster). But they were still slightly outpaced by the RCPC point decline (the RCPC average fell 0.03 days more than the city point average). Thus, an interesting dichotomy developed in 2008, where the spread between city point clearings and RCPC points widened slightly for lockbox deposits, but shrank significantly for OTC deposits. Numerically, the difference between city point and RCPC point clearing averages for lockbox deposits rose a slight 0.04 days to 0.62 days during 2008. For OTC deposits, the difference fell 0.15 days to 0.48 days during the same period. This difference is deemed significant as it is an approximation for the controlled disbursement float advantage over regular business checking.

Having now seen (and measured) the impact of image exchange for two full years, two trends in the Clearing Study seem most significant. The first is the sheer rapidity of clearing for city points and non-controlled RCPC locations. Among other factors, the ability to “late evening post” has dropped the average city point clearing time just under 0.75 days for lockbox deposits during that period and over 0.50 days for OTC deposits. The second trend, which has been both expected and predicted, is the compression of clearing differences among controlled disbursement points. Two years ago, for lockbox deposits, the controlled point with longest published (smoothed) clearing times had 1.14 more clearing days than the controlled point with the least. For OTC the difference was 1.37 days. This survey, those same differentials are 0.61 days for lockbox and 0.90 days for OTC (roughly 0.50 day decrease for both). And the evolution is by no means complete.

About the Clearing Study

The Phoenix-Hecht Check Clearing Study™ is the industry standard for measuring the time delay for a deposited check to be debited at the originator's bank account. The purpose of the Clearing Study™ is to reflect the minimum amount of time required for a check to clear through the banking system. As part of the 2008-2 survey, conducted in September 2008, checks were drawn on 85 banks representing Fed City, RCPC and country points in all Federal Reserve districts. During the study, Phoenix-Hecht deposited checks in 35 major lockbox cities as well as 57 bank branch locations. Lockbox deposits use sufficiently large dollar checks to ensure entry into the bank's expedited clearing programs. The deposits are timed to represent normal deposit patterns experienced by corporations and to make the bank's major availability deadlines. The low-dollar, over-the-counter deposits are timed to make each deposit site's deadline for end-of-business day activity. These over-the-counter checks often experience longer check clearing times than the lockbox deposits. For purposes of the executive summary, Phoenix-Hecht publishes drawee site results based upon an average using all deposit points (lockbox or over-the-counter). Each deposit point’s clearing time to a drawee location is weighted relative to the population of the geographic region surrounding the deposit location. Clearing times are expressed as the average calendar days from day of deposit to day of debiting at the drawee account. See Check Clearing Methodology for a complete description.

Individual bank results can be requested directly from participating banks or through Phoenixhecht.com