Legislation simplifies payment management, but few businesses take advantage
While checks previously had to physically make their way to a financial institution before being processed, government legislation has attempted to reduce this burden and make check processing easier for businesses and financial institutions. A law that took effect in 2004, the Check Clearing for the 21st Century Act (Check 21) simplifies processes, but some companies have yet to fully take advantage of the efficiency this legislation aimed to create.
What is Check 21 and how is it helping businesses and financial institutions?
Check 21's ultimate goal is to help companies, banks and credit unions process checks in a more efficient manner. Rather than physically transporting paper checks, organizations can now process checks electronically, cutting costs and simplifying processes. This doesn't mean companies can no longer pay with paper checks, but it does mean those receiving payments find their workload reduced, as do the banking institutions for both the client and check recipient.
Not only do businesses and financial institutions no longer need to worry about transporting checks, they have also seen an increased clearing time since Check 21 was implemented. According to the Federal Reserve, once a check is deposited with a bank, it is nearly always debited from the client's account the next business day. Speeds could continue to increase as technology advances, allowing companies to have the most up-to-date information on accounts and finances daily.
Benefiting from Check 21
While Check 21 offers many advantages, plenty of companies have failed to take these into consideration and aren't yet enjoying the benefits the legislation was intended to provide. Even though remote deposit capture options are available, relatively few have implemented this technology and experienced the advantages.
Many businesses are hesitant to rely on electronic deposits and have a range of concerns about investing in the technology. These worries include spending money on an additional piece of equipment, slow processing speeds and inaccurate scans. However, these concerns are unfounded when companies use the latest check and currency scanner machines, which not only can scan both cash and checks, but can also handle high volumes in a timely manner and ensure maximum accuracy. This makes it a major benefit for businesses and can allow them to speed up processes and spend more time with consumers, improving their customer service and prompting clients to spend more.