Summary of 2011-2 Check Clearing Study
Controlled Disbursement Float “Insulation” Increases

Five years ago, with paper check clearing still prevalent, city drawee points averaged one business day (1.4 calendar days) to clear via lockbox deposits. In the 2011-2 Phoenix-Hecht Clearing Study ™ they averaged a mere 0.34 days. This metric is important, since controlled disbursement points (CDA) reflect the “insulation” offered against regular checking presentments. This study, CDA points averaged 1.01 calendar days longer clearing than city points for lockbox deposits, up 0.12 days from the previous study's 0.89 days.

For teller, so-called “over-the-counter” (OTC), deposits of smaller dollar items, the city point clearing average fell insignificantly 0.02 days to 0.86 days versus the CDA average of 1.49 days, itself up an inconsequential 0.03 days. Thus the CDA “insulation” value for OTC deposits rose nominally 0.05 days to 0.63. As both charts imply, the Clearing Study includes RCPC drawee points that are not controlled disbursement points. Thus the separate “CDA Points” line is meaningful.

We caution the reader that two new controlled points were added to this study. Both points produced longer than average clearing times and had some influence on lengthening both the RCPC and CDA averages for both types of deposits. Also of note, bank conversions in several states from Wachovia to Wells Fargo appeared to contribute to the falling city point lockbox deposit average. We also believe there is evidence that deposit banks took advantage of extending deadlines at SVPCO. This contributed to lockbox deposit improvements, but OTC deposits occurred too late to enjoy that improvement.

The 2011-2 Phoenix-Hecht Clearing Study ™ showed decreasing city point clearing averages for lockbox deposits. This trend increased the relative float benefit exhibited by controlled disbursement points versus a regular checking alternative.

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 2011-2 survey, conducted in September 2011, checks were drawn on 71 banks representing Fed City and RCPC 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