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Remittance Processing
Wholesale Retail
In-House
Remittance processing can take various forms depending on the
remittance size, return documents, and volumes. This topic section
was designed to give the corporate treasury manager an overview
of the various components which comprise the service, along with
performance measures and other items of interest.
USPS Remittance Mail web site
Current issues in remittance mail
Extracts from Business Mailers Review
Complex Payments
Bob Murphy
Vicor
December 2005
Remittance Processing Providers by Location
Wholesale
Service Providers
Requests for Individual Provider
Postal Survey Performance
Latest Postal
Survey Trends
Results of the 2007-2 study.
Results valid through July 2008
Gains Hold in Stable Survey
The 2008-1 Phoenix-Hecht Postal Survey, conducted in late April, produced little in the way of trends. But that was good news for remittance mail whose performance had improved dramatically in the fall 2007 survey.
Since 2001, spring surveys have usually produced performance improvement. Oddly however, the last two have not. Perhaps this spring survey can be “forgiven” in light of the impressive and unexpected gains the previous fall.
Although only twenty-two percent of recipients improved nationally versus the previous survey while a third had some deterioration, average receipt of mail was within a fractional hour of the previous survey. Regionally and locally, sites were distributed more equally between improvement, deterioration and no change, so average receipt of mail was likewise unchanged. Total float days, the more accurate measure of remittance mail performance, remained statistically unchanged in all three geographies.
Survey Observations. We ended our last executive summary, “…the 2007-2 Postal Survey showed impressive and historically contra-indicated fall delivery improvement. The level of improvement in fact begs for the next survey to either confirm or refute its sustainability”. The 2008-1 survey confirms the improvement. Despite economic turbulence, there appear to be no short-term indicators of anything but continued strong performance for advantaged remittance mail.
As yet, the industry cannot judge whether the Remittance Plant certification program will bring more uniformity and focus to the highest volume remittance delivery facilities in the country. Confirm data, used within the Postal Survey, does seem to indicate that there can be some improvements made to the coordination of plant sorting and caller box access and delivery. A Remittance Mail Advisory sub-Committee, as well as individual Postal Survey participants, will be monitoring developments in this area.
Longer term, the impact of the Postal Accountability and Enhancement Act, which limits postage increases to CPI for market dominant products, and shrinking First Class mail volume, undeniably exacerbated in the recent economic climate, will create a financial reality within which service must conform. As much as the industry is reluctant to acknowledge this, remittance mail receives “premium” service levels which create non-compensated expenses. Given three wishes, the industry might be wise to use one asking for sufficient postal economic stability to retain existing service levels.
Individual bank results are available from participating processors
or can be requested from this web site.
The Postal
Survey is the leading independent mail time survey for the treasury management industry. This survey, conducted in
late April 2008, measured mail from 170 originating cities into approximately 115 sites in 31 destination cities. For purposes of the executive summary, Phoenix-Hecht publishes results based upon all originating mail (national) to a receiving site or city, mail originating from the receiving site’s or city’s region (approximately one-quarter of the nation), or mail from the six to ten originating cities closest to the receiving site or city (local). Individual originating city results are weighted by population to achieve each of the “regional” results (national, regional, and local). Mail hours and mail days do not directly correlate since mail days are stated as banking days dependent upon ledger credit.
Methodology
used to conduct the Phoenix-Hecht Postal Survey
Postal Survey is an objective, carefully monitored,
statistically validated measurement of total float in a remittance
collection system. Postal Survey results are calculated using statistical
techniques designed to simulate the corporate lockbox experience.
Lockbox location site
selection technology
White paper describing the use of The Collection
Model and affiliated databases Product Usage
The use of wholesale lockbox service has been relatively
stable over the past few years. Historically, wholesale lockbox
was considered a "large corporate" service but companies
of all sizes can realize important benefits from the service.
Service Pricing
The pricing of wholesale lockbox services is
generally quoted in an unbundled fashion because of the variations
of processing requirements. On a standardized account analysis service
code 050100 represents the per item cost of processing the check
and invoices received in a wholesale lockbox.
Blue Book of Bank Prices Executive
Summary
Actual prices paid for the most common cash management
line items
Order your copy of
the only compilation of actual prices paid by corporations for services.
Remittance Math
Simple calculations from an account analysis
and bank statement over time can detect increasing or decreasing
float performance. A company should track monthly such figures as;
average daily float, average collected balances or average float
as a percentage of ledger balance (account being monitored should
only contain lockbox activity). Over time an acceptable level of
float should be experienced if all systems are functioning properly.
Observations outside the norm (either above or below
average) indicate a need for further investigation. Points above the established norm can be an indication of major
deposit deadlines being missed due to delayed mail or a problem in processing. Points below the established norm
may indicate a backlog of processing being held until the next day.
Average Days to Collect
Mail Time Measurements
An explanation of the factors that can cause
differences between mail time as measured by Phoenix-Hecht and mail
times observed in a lockbox study.
Importance of wholesale lockbox features
Quality Trends
Phoenix-Hecht Quality Index
The Phoenix-Hecht Quality Index is a statistically
valid comparison of customer perceptions about bank performance.
BAI Quality Measures
The BAI quality measures are an indication of
the relative production error rates experienced in the banking "factory."
This white paper explains the measurement process.
Measuring Modeling and Monitoring Your
Lockbox
An in-depth discussion of how mail moves through
the postal system, how mail times and availabilities are measured
by Phoenix-Hecht, how to recognize the need for a lockbox study,
how to approach doing a lockbox study, and how to monitor your lockbox
performance. Booklet is 50 pages. PDF file has an index.
Image Processing
The utilization of digitalized image processing
can improve receivables processing by routing documents electronically
for clarification to resolve exceptions, locate specific payments
quickly to apply cash and approve credit, and reduce paper storage
costs.
Imaging
is the creation of a digitalized picture of an object such as a
check or invoice which can be displayed, enlarged, annotated, duplicated,
stored, routed or indexed for future use. In a lockbox environment,
imaging is used to capture pictures of checks, envelopes, invoices,
remittance advices and correspondence.
Images courtesy of Bank of America
Most
image based systems can be delivered via the Internet or on a CD-rom.
Companies should work with their bank to develop an imaging strategy.
To get the most benefit from the investment, internal work flows
may need to change.
Retail
Retail Service Providers
Requests for Individual Provider Postal Survey Performance
The cost of processing retail remittance, while
driven primarily by transaction fees, also has a float impact that should not be overlooked. In a wholesale lockbox,
float benefits have long been easy to measure. Until recently, float has been difficult to quantify for a retail
remittance processing site. Phoenix-Hecht, best known for its Postal Survey (a semi-annual study of wholesale lockbox
times), also provides an analysis of retail mail float for corporations
The Retail Mail Analysis
has total float times based on difference processing scenarios.
As a guide a corporation should use a higher processing assumption
for larger volume lockboxes.
Payment
Processing Basics
provided by Creditron
- Why Automate Remittance Processing?
- Manual Process Workflow Diagram
- Single Pass Automated Process Workflow Diagram
- Dual Pass Automated Process Workflow Diagram
- Sample of OCR & MICR fonts
- Sample Scanline
- Scanline Recommendations
- Sample Checkdigit Calculation
ARC or Check
21 to Collect Payments?
A white paper by Phoenix-Hecht
Is ARC a Good Collection
Method For My Company?
A white paper from J. William Murray, eBusiness
Executive Professor,
Towson University, Towson MD
Electronic re-presentment
of returned checks
Any firm that accepts checks in payment is eventually faced
with trying to collect on a "returned item".
Pricing
In-House Processing
Hardware & Software Providers
Retail Lockbox Processing Service Providers
Listing of retail lockbox processing service providers from TransactionDirectory.com, "the premier web site for locating news, information, vendors, services and products for electronic and paper based transaction processing".
Blue Book of Bank Prices Executive
Summary
Actual prices paid for the most common cash management
line items
Order your copy
of the only compilation of actual prices paid by corporations for services.
Outsourcing Service Provider Directory
Compiled by The Association for Work Process Improvement
Click here to request your FREE copy of the 2007 directory.
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