Processing Cash Receipts with an Internal Lockbox Solution

A key financial process for any business is getting the check in the bank. Leaving customer payments laying around is literally leaving money on the table. The faster payments are credited to your accounts, the better your overall cash flow.

Most business banking institutions have a form of lockbox service to sell. With a lockbox, your customers often send payments directly to the bank. The bank processes the check and the remittance advice if the customer included it. If all goes well, you get a data file from the bank and your account balance goes up. If all does not go well, your staff can spend considerable amounts of time applying payments to the correct accounts, resolving payment differences, and tracking down unknown payers. And you get to pay for the processing of each check regardless of whether the lockbox service got it right.

To avoid lockbox costs and ensure correct results, one Genus client decided to take on the cash application process themselves. They essentially created their own internal lockbox service.

Using Tungsten Automation (formerly Kofax) TotalAgility^®, the cash application process starts with staff members creating a ‘batch’ from the day’s receipts. They then create critical balancing values by manually totaling all the check amounts and by counting the number of checks. Once they have those totals, they begin the TotalAgility process by entering them. TotalAgility assigns a unique tracking number to the batch.

The checks and remittance documents are scanned for processing. TotalAgility then extracts payment information from the check—including handwritten ones—and extracts data from the remittance advice if the customer included one. At this point, the number of checks MUST match the entered count for the batch to continue. TotalAgility supplies several options for resolving any count mismatches.

A batch entering the system where ingestion worked as it should, extraction worked as it should, every check came with remittance advice, every check matched the remittance advice, and the totals matched the control values simply moves on, without any staff intervention, to update customer account records and the finance system.

As you may imagine, and just like the situation with a bank lockbox, there are many cases where all is not well. Remittance data may be missing or may not match the check amount, check amounts and account data may not read correctly, and so on. TotalAgility manages the entire process and sends the exceptions on to the staff member most qualified to address it. For example, situations, where the check does not match the remittance advice, can route for the resolution to a staff member with intimate knowledge of the customer. And that staff member could be somewhere else in the country, or somewhere else in the world.

The batch goes to the bank for deposit once corrective measures are complete, everything balances, and all is error-free. Genus has a module we call Bank Manager that receives data and check images from TotalAgility and prepares a standard X9 Image Cash Letter file. Business banks accept X9 files and, in certain cases, will offer incentives for depositing electronically.

Genus and TotalAgility can lower your cash-receiving costs. Highly efficient processes put you in control and allow rapid action with minimal staff intervention. Challenges dealing with external lockbox services can be a thing of the past.