Remote bank deposits (#41)
/In this podcast, we cover the process flow associated with using a remote bank deposit system. Key points made are noted below.
How Remote Bank Deposits Work
Today’s topic is remote bank deposits. This is when you use a check scanner to extract information from incoming checks and send the information on the checks over the internet, to the bank. There’s no need to send the physical checks to the bank at all. I just acquired a check scanner, and I’ve been tooling around with it for a couple of weeks, so I can give you some first-hand knowledge of how this nifty piece of technology works. And by the way, what I’m about to tell you is based on the Key Bank remote deposit system, so systems used by other banks may vary a bit.
First, you order the check scanner from your bank. Then, you arrange for about an hour of training time over the phone with a bank employee. Of that hour, about half is used up while you download and install software to use with the scanner. I don’t know why it takes this long, since we have a pretty massive T1 line, but it does take some time.
The rest of the training is a hands-on training session where you run actual checks through the scanner.
The Check Scanning Process
The basic scanning process is to separate all of your checks into different piles for each company being paid. For most companies, their customers are just paying them, so all of the checks would go into a single stack. In our case, we own four companies, so we end up with four piles of checks. Then, we add up the dollar amounts of the checks in each pile, so that we have batch totals for each one.
After that, we log in, and click on the account number that corresponds to a company. Then we enter the deposit total, and we’re ready to scan. To do so, we sort the checks for a specific company by physical size, so the smallest checks are in front, and the largest in the back. This usually means that those cheap little $5 rebate checks end up in front. Then, we put them in the input tray of the scanner, and it scans the batch at the rate of about one check per second. While it does a scan, the scanner automatically prints a scanner endorsement on the back of each check.
If the scanner can’t read the amount of the payment shown in a check, then the software shows a scanned image of the check, and we enter in the correct amount. We’ve found that the system can read typed checks quite well, but it has issues with handwritten ones, or checks printed in reverse, where the text is in white, on a black background. Key Bank tells me that the system’s ability to correctly read the dollar amount on checks is about 65%, but I find that it’s way higher than that, as long as the checks are typed. I’d say the rate is more like 98% for typed checks.
Then, the system adds up the checks that we’ve scanned into it, and creates a deposit total, which it compares to the expected deposit total that we originally entered. If it’s correct, then we press a button to submit the deposit and print a receipt, which we file by date. Key Bank also tells us to retain the originals of all checks for 15 business days, after which we can shred them. The total time to submit a daily deposit is just a couple of minutes.
Now, a couple of extra items that you might be interested in. First, what about bad scans? Well, so far, we’ve never had one, which says something about the reliability of the scanner. If we were to have one, we would delete the scanned image and run the check through again. If the scanner has already printed a scanner endorsement on the back of a check that we need to scan again, then we put some white-out tape over the endorsement before doing another scan.
Exception Conditions
Another issue is, what about foreign checks? So far, you can’t scan them, so you still have to send in the originals. The problem is apparently not in the scanning system, but just that the laws have not been passed that allow the bank to process these types of checks. If you happen to run a foreign check through the scanner, it’ll notify you, and not accept the scan.
Also, what if you mistakenly send the same check through twice? The system keeps track of all checks scanned for the past ten days, and will notify you when a duplicate check goes through. It shows you images of both the first and second checks, so you can see if there’s really a duplication. Then, you just cancel the second check.
Scanner Maintenance
Also, the maintenance on the scanner is quite minimal. We’re supposed to wipe down the scanning hardware with a Q-Tip about once every three months, and there’s also a Hewlett-Packard inkjet cartridge for printing the scanner endorsement, for which we keep a backup on hand. Other than that, there’s really no maintenance to speak of.
System Pricing
The price of the system is about $100 a month. We’re doing it mainly for the convenience, since no one wants to deliver checks to the bank, and mailing checks can sometimes result in checks that are lost in transit. There’s also a one to two day reduction in check clearing time. For us, the system is not really economical, but it sure is convenient.