Remittance Processing

Wholesale       Retail

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 2020-2 study.
Results valid through June 30, 2021

Phoenix-Hecht Postal Survey™ Executive Summary

We mailed it from the Right Place, … but it must have been the Wrong Time

2020 lived up to its reputation by delivering a badly damaged Fall Phoenix-Hecht Postal Survey™. Four elements came together to produce this unprecedented survey. First and foremost, delivery of mail-in ballots, both to and from voters, occurred with previously unimagined volume at a time when package volume delivery was already daunting. Second, the transportation system was unduly strained by this package volume, lingering reductions in commercial air capacity, and a USPS restructuring of ground transportation still needing implementation adjustments. Third, Covid-19 absenteeism, because of the Fall surge, was significantly worse than in our June survey. And finally, in some USPS plants, equipment availability was a constraint because overall processing volume, exacerbated by ballot volume (especially in swing states) greatly exceeded expectations.

How damaged was the survey? Nationally, eighty-five percent of sites experienced deterioration which averaged almost eight hours (a full processing shift). Improvement was virtually non-existent, so the overall average for participants increased 6.5 hours. This level of deterioration has not been seen in this century.

Regional results were similar, with slightly more than 75% of sites deteriorating an average 7.5 hours. Improvement was at least measurable (13% of participants), so the overall average for participants was about a 5.5-hour increase.

Local results proved that there was more at work than just the transportation system. Seven in ten sites experienced deterioration averaging about 5.5 hours. The overall average for all participants was an increase slightly above 3.5 hours.

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 reflective of the survey deterioration. About half of sites experienced deterioration, and only about one-tenth had improvement. 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 handoff mean increased about an hour to 14 hours, and the median rose about 2.5 hours to almost 12 hours. The separation of mean greater than median is greatly influenced by about one-third of participants having 17-hour or longer handoffs (indication of gaps in mail pickup).


It is difficult to adequately communicate how extraordinary this Postal Survey was, judged against historic patterns of change. The twenty-one hour increase in Philadelphia seems highly correlated to ballot activity, given the length of time it took to count mail-in ballots. However, Pittsburgh, also part of the extended ballot count, had far less impact. Charlotte’s fifteen-hour increase also feels related to the highly contested Presidential and Senate races with record levels of mail-in ballots (again correlated to some extent by how long it took to complete voting counts). Clearly, timing the survey for late October likely maximized the election impact (… but it must have been the Wrong Time). Previous elections have not had this huge impact on our Fall survey, but then again, there has never been an election with this level of mail participation.

A second ingredient for a perfect storm would be diminished capacity against an overwhelming volume swell. Viewed against later November and December, Covid-19 was perhaps not quite “red hot”, but infections certainly exceeded the late June period of our last survey substantially. Employee availability, plus the extreme scrutiny involving the delivery of every ballot, had unequal impacts across the delivery plants. Commercial airline space had only minimally recovered from late June, if at all. A ground transportation redesign that had been implemented included elements that added to cycle time, such as trips arriving later or having increased stops to improve load efficiency. Also impacted was a project intended to unify and improve the sortation capacity and efficiency of delivery point sequencing (sorting to the carrier walk sequence). Outdated equipment had been removed from many plants, but the greater capability equipment had not been fully installed. The very halting of this replacement project, supposedly to reinstate stability, left some plants worse off than had this program been allowed to proceed.


The 2020-2 Phoenix-Hecht Postal Survey™ was conducted in late October and early November. Remittance mail collided with unprecedented ballot delivery, package volume approaching peak holiday delivery season levels without the added temporary work force and processing annexes, resurging Covid-19 absenteeism, and a USPS organization having some efficiency enhancements placed in abrupt limbo. Needless to say, remittance performance was badly damaged. The levels of deterioration exhibited were extraordinary. The average participant lost 6.5 hours for national delivery, about 5.5 for regional, and a little more than 3.5 hours for local. Only two participants out of forty-seven gained national delivery improvement. One of those removed a restrictive security provision from its mail receipt process. The other showed slight improvement in a limited six-day single shift operation whose delivery hours were already relatively long. Eighty-five percent of sites suffered national mail hour deterioration, 77% did so for regional delivery, and even 72% did so for local. The published survey provides a thorough quantitative evaluation of this extensive deterioration to its participants.

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 and early November 2020, measured mail from 170 originating cities into 47 sites (all of which participated in both the current and previous June 2020 surveys) in 20 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

Mostimage 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.

Unencoded Checks Other Fed TMA 100224