Check 21 brings financial benefits to owners and managers.
Check 21 and Remote Deposit Capture is tailor made for the property management business to improve not only the bottom line, but improve customer service as well.
Check 21, formally known as Check Clearing for the 21st Century, is designed to enable digital processing and clearing of checks. The law was driven by the Federal Reserve System's desire to reduce the costs of processing checks and delays in the paper system, which came into dramatic light when all aircraft, including those carrying paper checks, were grounded for several days following the terrorist attacks of 9/11.
The new rules permit digital transformation of a paper check into a digital image, which banks and the Federal Reserve System process in lieu of the paper document. Without the need to wait for the paper documents, the clearing process starts two to three days earlier, meaning much faster settlement of funds for local and non-local payments.
The benefits for property managers that receive checks, and especially checks from multiple locations that must be deposited locally and reconciled in a central location are enormous.
First, the process of getting checks from the office to the bank can be done electronically rather than having to have a person physically drive to the bank to deposit the checks.
Second, because the checks are now digital the check can be electronically sent to the principal administrative office for posting to the accounts receivable system and transmitted to the bank.
For many multi-location businesses remote deposit also means that bank accounts can be consolidated into a single account, reducing fees and easing the reconciliation process.
Also, because the time involved with getting the check to the bank has been reduced, and because the entire check settlement process has been improved, clients usually enjoy reduced banking fees as well as significantly improved access to deposited funds.
An additional benefit, and perhaps the most important is that some remote deposit vendors also offer integration into back office accounting systems which reduces the time involved with posting checks as well as improving the accuracy of the posting process.
Procedurally, with Remote Deposit Capture, the real estate property manager or an employee scans checks when they come into the front door rather than taking (or sending via courier) the paper documents to the local bank branch. So the clearing process starts immediately.
Most banks accept later posting times for imaged checks. In the paper world, the checks must be deposited, which may not happen the same day they are received, and then must go from the bank of first deposit through the clearing system, with mail delivery in between each step.
Property management firms using Remote Deposit Capture no longer need to concern themselves with the bank with the most convenient physical location. Instead they can look for the financial institution that offers the best financial relationship in terms of better earnings or reduced fees.
Firms with multiple locations can consolidate their banking relationships with a single provider that provides the best total financial package.
By starting the check settlement process more quickly and efficiently via Remote Deposit Capture, the real estate management enterprise has access to funds two to three days earlier than with paper check processing
These funds can be invested or used to reduce debt. It is not uncommon for a large company to see increased interest earnings of hundreds of thousands of dollars simply by speeding up check settlement times.
Accelerating the processing time also means that property managers will get notification of bad checks much more quickly enabling them to start collection procedures more quickly.
The faster a property manager starts to collect a bad debt, the more chance he or she has of receiving the delinquent funds. The property manager can also make a quicker decision regarding eviction proceedings. So that a better paying tenant can occupy the unit sooner, boosting the property management firm's revenues.
A related expense reduction comes lower fees incurred from NSF checks. With some property management firms receiving hundreds or even thousands of checks monthly, this cost savings can be quite substantial.
There can be incremental savings as well. Financial institutions typically charge less for electronic NSF checks than for their paper counterparts. Add to that the elimination of potential for lost or stolen checks, and the reduced risk benefits are clear.
Converting checks into electronic images eliminates the need to key check detail into the property management company's accounting system. Operational benefits include time savings from reducing, perhaps even eliminating, redundant data entry. So bank reconciliation is simplified, enhancing administrative/back office efficiency and accounts are credited faster, improving customer service.
The automated process of remote deposit capture enables the property management firm to incorporate the resulting data into the enterprise accounting, process monitoring and business intelligence systems.
The capture process can be automatically posted to a property management firm's account receivable system or other back office sotfware. By eliminating the need to key in the data from paper checks to these systems, Remote Deposit Capture speeds up bookkeeping and reconciliation and eliminates human error in the data entry process.
The enhanced revenues, reduced expenses, enhanced fraud protection and better account management capabilities, make Remote Deposit Capture a beneficial technology for property management companies.
The sooner a firm adds Remote Deposit Capture functionality, the sooner it will be able to reap the rewards.
By John Sarich Executive Vice President RemitPro, Inc.
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|Comment:||Check 21 brings financial benefits to owners and managers.|
|Publication:||Real Estate Weekly|
|Date:||Aug 15, 2007|
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