article

Quicker Cash Quicker Cash

Posted: 7/2003

Quicker Cash
Speed Payment Processing with
Automated Lockbox

By Ron Whaley

When it comes to getting paid, everyone
would like faster access to their money. Telecom companies are no different.
Their problem is that manually processing customer payments can be tedious and
time-consuming. However, many carriers are now finding relief from an automated
lockbox service. As technology and demand for the service have advanced, even
smaller telecom companies can now consider it as an option for expediting and
managing customer payment processing.

An automated lockbox can be thought of as
cash-management tool reducing costs, saving time and eliminating inadvertent
clerical errors.

Heres how it works: Banks and other service
bureaus offer lockbox services. Customer payments are directed to a lockbox
provided by the bank. Payments are automatically processed by scanning the
remittance slip data and encoding the coinciding check. The payments are then
immediately deposited into the companys account.

The bank records information requested by the
company such as an invoice number, amount due, check number and check amount.
Reports of incoming funds and transaction images are transmitted to the company
to automatically update their accounts receivable system.

In contrast, heres how manual payment
processing works: Payments are sent directly to the company, they empty all the
envelopes, count the money, key in data to credit the account, prepare a deposit
slip and then take a trip to the bank to deposit the money into the company
account.

Receiving payments this way is labor intensive,
inefficient and delays access to incoming money. With an automated process, the
burden of manual entry of cash receipts is greatly streamlined and access to
reliable and up-to-date receivables information is hastened. More importantly,
the risk of data entry errors is virtually eliminated and the collection of
payments dramatically accelerated.

Making the Switch. There
are a number of reasons why companies make the switch to an automated lockbox.
It could be to decrease the float on incoming cash or to ease payment
management. It may be time to switch if your company is encountering these
challenges:

  • Speed of payment collection is too slow
  • Check processing is delaying access to money
  • Updating accounts receivable is slow and
    tedious
  • Administrative expenses for payment processing
    are high
  • Human data entry errors are increasing
  • Days-sales-outstanding are too high

Migrating to a lockbox has had a positive impact
on companies like long-distance carrier BuyersOnline, which recently switched
from manual processes. When youre working with hundreds of invoices, an
automated lockbox is very valuable, notes Linda Huffman, billing director at
the company. She says they no longer have to pay a person to manually enter the
payments each day. This has saved them money and decreased the amount of errors
associated in keying in data from remittance slips by hand.

Its not a 100 percent solution. There is
still the risk of error with the automated process if the readers have trouble
scanning the data, says Huffman. However, if account information is
printed clearly and accurately on the bill and the lockbox company has
state-of-the-art-readers, it absolutely decreases the amount of mistakes usually
caused by human error.

BuyersOnline has found the reporting process from
an automated lockbox company to be an added benefit. Now they can retrieve
reports immediately and view data in real time through the Internet. Our
lockbox deposit detail and reports can be viewed the day they are received.
Information is downloaded to a spreadsheet and we can file it for future use,
she says. They also customize our reports so we can choose the information
that is reported to us. It has made the daily process for accounts receivable
much easier and efficient.

Ensuring Accuracy. In
order to make the switch to customer payment efficiency, an invoice has to be
redesigned to incorporate an OCR scanline on an invoice. It is a mandatory
element of the lockbox process that must be incorporated into an invoice layout
(see graphic).


OSG Billing Services

An OCR scanline is a mandatory element of the lockbox process.

An OCR scanline is a set of numbers that include
data such as the account number, invoice date and amount due. It is located on
the remittance section of the invoice. When the lockbox company receives a
remittance slip, an optical character reader looks at the scanline for the data.
It is then correlated with the payment sent in and the information entered.

Lockbox companies have strict requirements about
how the OCR scanline must be printed on the invoice. These restrictions limit
the font size and color, the number of characters and the scanline placement on
the remittance form.

When the print quality of the scanline is clear
and the data within guidelines, the optical character reader can easily scan and
enter the information. When there is even the slightest error with the scanline,
the remittance slip is rejected as an unprocessable item and put aside. It
is then entered manually by the lockbox company or sent back to the company via
mail to manually enter. Rejected remittance slips are costly not only because of
the delay in payment but the additional charges for manual entry.

OCR scanlines are intended to ease the payment
and remittance procedure, not make it more difficult. Errors can be avoided by
finding a lockbox company that has the latest scanning equipment that can
guarantee optimum read rates of remittance information. On the print side, its
important to make sure your invoices are accurately run on the latest printing
machines.

If you are outsourcing your bill presentment and
distribution, be sure to partner with a company that is familiar with scanline
requirements and has experience with integrating it into an invoice design. They
should also provide a printing process that is accurate and dependable to ensure
the OCR scanline is easily read and not rejected. For example, when positioning
a scanline you need to be mindful that printing in the same zone on the reverse
side will cause the optical character reader to reject the remittance.

Making an automated lockbox system a success is
highly dependant on the accuracy of an OCR scanline. When a company decides to
switch from a manual process, headaches can be avoided by making sure the set up
is right from the beginning.

Ron Whaley is vice president of sales and
marketing at OSG Billing Services.

 

Links
BuyersOnline www.buyersonline

OSG Billing Services www.osgbilling.com


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