Check Payment Processing

How Electronic Check Processing Helps Businesses Reduce Check Processing Cost

By increasing overall productivity, electronic check payment processing can decrease the overall check processing cost. The cost is inherent in the various inefficiencies of paper based check payment processing. Businesses can benefit from use of an electronic check payment processing system by saving costs comparatively. The Federal Reserve and the National Automated Clearance House (NACHA) has backed electronic check processing based on the technological advantages of the system.

Electronic check payment processing provides these benefits by addressing the issues involved in paper check payment processing. These issues relate to payment chain inefficiencies, errors in data entry, and multiple handling of payments during different stages of the process. Dependence on human resources in paper check payment processing gives rise to inefficiencies and mistakes.

With businesses shifting towards automated electronic check payment processing, the control over these issues shifts back to them, rather than being in the hands of customers and the banking system. This is where the control should lie. This is because then businesses definitely will strive for reducing check processing cost to the maximum possible.

But how much productivity can be gained by going in for the automated electronic check payment processing? This can be analyzed and the results of such analysis will be there for all to see.

The first step is to remove the paper check from the picture as it brings forth several inefficiencies. By doing this, handling of the paper check by employees is then straightaway eliminated. By reducing the involvement of human resources in the bank check processing, productivity gains immediately.

By this one step, reconciliation of accounts and the deposit of payments is taken away from the purview of the banking system and retained with businesses. The generation of electronic records resulting from day-end processes then rests with businesses themselves.

Further, their sending of deposits by keystroke to the payment processing (automated clearing house) ACH check processing operator is greatly facilitated. The funds are then deposited directly in the accounts of businesses within a period of 24 to 72 hours.

Any checks that cannot be processed are noted within a period of 48 hours. They can be later represented after any issues related with their processing are resolved. By eliminating the paper check from the process, businesses can also eliminate the need for sending it to the bank and monitoring its status.

The productivity gain is substantial when you compare the handling of the electronic check with the handling of the paper check. The electronic check is handled only once and that too by a single employee. On the contrary, the paper check is handled manually by more than one employee and it involves 6 to 7 separate steps. Further, in the case of the paper check, the information may be entered many times.

The paper check processing cost can be reduced by as much as 70 to 80 percent by shifting from paper check to electronic check processing. This is because not only time is saved, but the process is also streamlined by removing employees from the processing work.

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