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.

Federal Reserve Financial Services
New extended remittance information (ERI) formats allow corporate originators of wire transfer payments to include 9,000 characters of extended remittance information within a wire transfer payment order. The publication explains what the ERI formats are, how they benefit businesses, and offers advice on approaching banks to get started using them.

Service Providers
Requests for Individual Provider Postal Survey Performance
Latest Postal Survey Trends

Results of the 2018-2 study.
Results valid through June 2019

Phoenix-Hecht Postal Survey™ Executive Summary

We did not Fall back!

Since 2016, the Phoenix-Hecht Postal Survey™ has exhibited the pattern “Spring forward, Fall back!” The spring survey, during that period, produced remittance mail improvement, but the fall survey surrendered performance. The 2018-2 Postal Survey has broken that pattern with a fractional hour national improvement and no regional change. While deteriorating sites outnumbered improving sites nationally, regionally, and locally, depth of improvement overshadowed that of deterioration.

Thirty-five percent of sites experienced national delivery hour decreases averaging just under four hours versus 39% experiencing increases averaging just over 2.5 hours. Overall, the participants with mail hour improvement gained 0.13 days in mail float, while those with hours deterioration lost only 0.08 days. Thus, the average participant gained one-third hour in mail, plus insignificant change in mail and deposit availability days.

Regional results were more skewed toward deterioration, in that 43% of sites had deterioration averaging 2.5 hours. Only three in ten sites improved, but averaged just under four hours. Neither group had statistically significant change in mail days. The average participant had absolutely no change in regional mail hours, plus insignificant change in float days.

For local mail, the six to ten origination cities closest to the recipient, more sites deteriorated versus gained (39% versus 28%), but both groups averaged about three hours of change. The average participant lost slightly less than half an hour with insignificant change in float days.

Caller Handoff Metric

The “Caller Handoff Metric”, a measurement from the last sort by USPS until the first sort by the processor to the customer level, was unchanged for 56% of participants. Improvement and deterioration were equal at twenty-two percent. The processor influences this measurement by the frequency of mail pickups; the USPS delivery plant performs a crucial step in moving the mail from the plant sorting machines to the courier pickup area expeditiously.

The survey median handoff was 8.8 hours, fractionally better than the previous survey. The mean also improved fractionally to 10.5 hours.

In 2019, USPS will resume testing and deploying measurement within Informed Visibility of the volume of wholesale remittance mail finished on the sorter, then staged in the Caller area, and then physically delivered to the processor’s courier. One remittance plant per area will deploy the processes required early in 2019. This is important to remittance processors because the handoff, the equivalent of final mile delivery to residential addresses, continues to be an area with improvement opportunities. The measurement described above must also include reporting and oversight to affect desired improvements.

Increased Use of Automation

USPS controllable financial losses (before allocations for retirement and health care expenses, etc.) have worsened. In response, USPS is continually adjusting to declining First Class mail volume against rising package volume. Use of automation is greatly expanding to help optimize expenses. Automation is utilized for sort program calculation, plant run plan generation incorporating predictive workload and dynamic staffing components, route optimizations both short and long, and the ability to monitor and intercept mail delivery about to miss standards. This constant “right-sizing” has substantially eliminated excess capacity that might be used to respond to fluctuations in volume caused by unusual events. The Fall delivery season is especially challenging for USPS given increased marketing mail ahead of the Christmas season, election related mail in years such as this one, and intensive preparation that occurs for the upcoming peak delivery season. This survey’s absence of deterioration is indeed a positive development.


The 2018-2 Phoenix-Hecht Postal Survey ™ reversed an almost three-year trend of better performance in the spring but worse in the fall. Although deterioration was more prevalent for sites regionally and nationally, depth of improvement overshadowed deterioration to produce essentially no trend. Oddly, when individual site performance was translated into city averages, deterioration was dominant. The USPS exerted concerted effort, which proved effective, to reverse this “Fall back” pattern. Remittance continues to enjoy a substantial performance commitment from the USPS.

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 October 2018, measured mail from 170 originating cities into 57 sites in 24 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.

Wholesale Lockbox Usage
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.

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.

Float Factor Tracking
Average Days to Collect

Float Factor Calculation
Float Factor Calculation

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.

Quality Trends
Phoenix-Hecht Quality Index

The Phoenix-Hecht Quality Index is a statistically valid comparison of customer perceptions about bank performance.

Accuracy of Processing and Reporting

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.

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.

Electronic re-presentment of returned checks

Any firm that accepts checks in payment is eventually faced with trying to collect on a "returned item".

Unencoded Checks Other Fed TMA 100224
In-House Processing

Hardware & Software Providers