Check processing in the age of digital transformation

Introduction

Digital transformation opens a wide doorway of possibilities for all types of businesses. Since most organizations now rely on automated means to bolster their intricate business processes, their accounts and revenue seem to have been bolstered.

Before starting any digital transformation journeys, businesses need to develop a clear understanding of their current maturity levels concerning the adoption of digital technologies. Businesses can categorize themselves into one of five different stages of transformation. An accurate assessment of the current stage can help a company take the proper steps to transform its O2C processes digitally.

An ever innovating organization that is setting industry trends is a perpetual living culture of constant digital reinvention as the backbone of the business model. Such market leaders operate entirely digitally with a digital-savvy workforce. They provide highly personalized and creative value to their customers. These companies are dynamic. They constantly morph to stay ahead of the competition.

Staying Ahead With Checks?

AR teams in SMBs are stuck streamlining their check-heavy receivables processing, expensive lockbox services, dismal, time-consuming Remote Deposit Capture solutions, and the high manual reconciliation required for growing volumes of ACH and other electronic payments. The foundation of mRDC – or next-generation mobile Remote Deposit Capture technologies could help reduce lockbox fees and processing while achieving end-to-end deposits and reconciliations for check payments.

Despite checks being the Achilles’ heel for AR departments, suppliers have no choice but to comply with the preferences of their buyers. The challenges with processing checks are classified as follows

Speed of Payment Processing

The major disadvantage for suppliers is that checks come with a float of approximately three days. This is also one of the reasons why buyers favor check payment. But then, several external factors come into play and further delay processing. The reason for slow processing could be attributed to scanning checks and remittances separately, depositing payments in banks, and manually keying in data for reconciliation. Together, this delays payment reconciliation by 3-5 days. This is why suppliers are reluctant to accept checks – payments hit the bank much later than the actual payment date, and suppliers end up having to support longer credit terms than intended.

Processing Costs

As per a survey by the Association for Financial Professionals, a company could end up spending as much as $30,000 for processing 20,000 checks a month. According to the study, receiving a paper check is five times as expensive as ACH! For small and medium-sized businesses with low dollar value transactions, the cost of processing checks directly eats into the profit margin.

Resources Requirement from Credit and Collection Effort

Processing checks is low-value manual work and does not add value to credit and collections. Being a highly manual process, it is also prone to errors. It’s double-trouble since check processing requires resources to be moved from credit and supplies without adding any value towards lowering DSO or working capital.

A Shift in Processing Checks

The most dynamic trend in B2B payments for mid-sized businesses is the rampant adoption of e-payments. Buyers are spoilt for choice when choosing between ACH, credit cards, and Wire payments.

Many studies indicate that for AR teams at small and mid-sized businesses, the volume of incoming paper checks amounts to a whopping 75%! This leaves SMBs in a dilemma since they only have three choices – either do everything manually, use Mobile Remote Deposit Capture (RDC) solutions, or pay for expensive lockbox services.

Let’s Talk About mRDC

mRDC (mobile remote deposit capture) is the efficient and convenient way to deposit checks while going with your mobile device. It usually happens through a mobile app or web application that allows you to select the specific account you want to capture the check. With advanced optimization, mRDC can grab the front and back of statements.

mRDC is the most sought-after technology for banking customers. Mobile RDC helps customers deposit checks anywhere, thereby reducing costs for banks and consumers, not having to visit the banks. In a nutshell, mRDC provides organizations with:

• Competitive advantage in the marketplace
• Increased customer satisfaction
• Improved cross channel communication and inter-channel integration
• Significant reduction in check fraud

Advantages Over Checks

• mRDC creates a substitute check that removes the part where printing the bill was necessary for making a deposit
• Being able to capture the bill electronically allows you to do this on-the-go
• In the finance sector, sending information plays a key role, and sending an mRDC makes it as easy as using Snapchat

Introducing RadiusOne AR Suite For Faster Check Processing

With RadiusOne AR Suite, it will be possible for any mid-sized business to automatically process vast volumes of checks without the hassle of lockbox fees. Analysts would then proactively approach their work while organizations build stronger relationships with their customers. Empower your company now!