JPMorgan Chase, in conjunction with J&B Software, Blue Bell, Pa., has established a firm foothold in the market for accounts receivable check conversion (ARC) solution at retail lockbox providers.
"We have a major credit card issuer who's processing millions of transactions through it, and we're very quickly signing up other of big lockbox processors," said Marcie Haitema, president and CEO, JPMorgan Chase ACH. "We've married check expertise with ACH expertise and have been able to bridge both worlds for ARC."
Check conversion at the lockbox eliminates the need for the physical check to move to a financial institution. Checks collected by companies such as credit card companies, utilities or telecom providers can be scanned into image files, and then converted into an automated clearinghouse (ACH) transaction. "In the paper environment, it could take seven to 10 days to get a return item notification back," said Haitema. If your company is managing risk carefully, that's a long time to wait."
"In the electronic arena, the ACH returns come back in a matter of a couple of days," Haitema added. "The benefit on the risk management side is substantial."
Once the checks are converted into ACH transactions, they can be destroyed. That's because the conversion changes the overriding regulations from those governing checks to those promulgated through the rulemaking procedures of NACHA, the National Automated Clearing House Association.
One of the biggest challenges involved with ARC at the lockbox was dealing with the various ways that banks encode information on the magnetically encoded MICR line. "There are standards for a check, but how the MICR line is formatted can vary tremendously," said Haitema. "Some have symbols in the line, some embed the check number in one place and some embed it in another place."
"Our expertise is being able to identify that quickly to get it built into a routine, so that as many items as possible can be converted," said Haitema.
Another benefit for a lockbox operator is the ability to scale down operational costs just as customers increasingly seek efficient electronic alternatives. "Electronic payments, going to the web site, calling up on the telephone--as these applications increase, this is a natural way to take costs out of the system," said Haitema.
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