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Lockbox / Remittance Pro Forma

Posted by Robert Hudecek

Jan 10, 2018 11:00:00 AM

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Dear V.P. of Electronic Banking:

I need your help. I just received a call from our third largest depositor asking if we can provide a remittance or lockbox OCR solution to process their monthly bills and needs an answer within the week.

Sincerely,
V.P. of Deposit Operations

If the above email is the least bit familiar to your organization, you are not alone. The need for operational improvement through software solutions has never been greater. From municipalities, to healthcare, to property management, to non-profit, most market segments who receive recurring payments are looking to provide greater service with existing staff and a trusted source for this solution.

Your answer to the above letter ought to be an enthusiastic, “Yes!” A financial institution can satisfy the depositor and deepen its relationship with a client like this. Also, rather than clients coming to you with a need, you can proactively make the case to likely prospects before they begin looking.

Make Some Reasonable Assumptions

As an example, you might have approached this large depositor with a business case for a remittance or lockbox solution. You can help the client quantify the benefits of mail-in and electronic payment solutions. Start with these pro forma assumptions:

Manual Correspondence Scanning per Minute                 60
Manual Check Scanning for Deposit Per Minute               30
Manual # of Transactions Entered/Minute                         2

Remittance Software Scanning Per Minute                       150        
Remittance Software OCR/ICR Error Rate %                   .2
Remittance Software # of Check Entry Fields/Minute       45
Remittance Software # of Doc Entry Fields/Minute           45

With these assumptions in place, we can now examine the volume of work being considered. Let’s say your big depositor processes the following:

Monthly Number of Checks/Transactions                          10,000
Monthly Number of Documents/Coupons                          8,000                    
Number of Fields Captured per Transaction                      2
Hourly Wage Rate (including benefits)                               $18.00 (includes benefits)

Using the figures above, we can now offer a concrete look at the savings garnered with an automated solution:

Monthly Labor Hours                                      88.89 (manual)                 4.15 (remittance software)
Monthly Labor Cost                                         $1,695.00 (manual)         $169.67 (remittance software)

Show, Don’t Tell

As you can see, whether you opt to provide services yourself or support the software tools for merchants to process on their own, remittance software provides an almost immediate value add to a finite staffing situation dealing with reoccurring billing.

Not only can you answer the call to action when questions arise from your public and private sector customers, you can strengthen your position with them as their trusted financial institution. It nurtures a longer overall relationship with your clients.

Topics: Financial Services Industry, Payments

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