(Excerpt from Remote Deposit Capture Sales & Training Toolkit)
Ben Anderson started the Anderson Siding Company in Berlin, Wisconsin in 1956. The company grew from a single sales office in Berlin into fifty offices and warehouses across the Midwest. Anderson's clientele are customers and contractors who buy wall paneling and exterior siding directly from local warehouses. The more warehouses Anderson has, the more they sell and the more satisfied customers they have.
When Anderson began operations they only needed one bank. They chose ACME Bank since it was nearby but after twenty-five years of solid growth and the need to make deposits in multiple cities, they had checking accounts at seven different banks local to each of their many offices. Having accounts in several banks in different locations generated considerable clerical work such as balancing, research, adjustments and reconciliation, which in turn required additional staffing.
No one ever thought much about the cost of making a deposit-it was considered the "cost of doing business." Also, no one complained about the hassle of meeting the deposit drop-off deadline. It was considered a necessary inconvenience.
All of Anderson's banks closed their branches at 2:00PM each day and each local branch was several miles from the office. To compensate for this, the Office Managers made deposits each morning on their way to work. The Managers who were uncomfortable carrying large amounts of checks used the bank's night drop on their way home. Either way, driving to the bank was a hassle and a half, so Anderson paid the Managers for the extra travel time and mileage involved in making each deposit.
Elaine Carter, Director of Accounting, knew that the current cash management process had become very expensive and desperately needed streamlining. Unfortunately, reviewing the deposit-making process was never a high priority. In fact, it had been on the "back burner" for years. Also, the hassle and cost of making deposits was coupled with the hassle and cost of moving the funds from each local bank to the ACME Bank daily for normal operations and investing. Elaine and Ben knew things had to change.
Since 1997, Anderson has used ACME Bank's not-so-efficient ACH Cash Concentration system as a cash management tool. Each day, using ACH Elaine logs on to six different Internet Banking systems to determine the available funds from the previous night's deposit. She calculates uncollected versus collected funds since all banks are not local to her office. Once she determines the available funds at each bank, she generates an ACH credit for deposit into the ACME Bank for all funds that she will collect from the other six banks. Because of the archaic nature of ACH, it takes two days to move the funds from the six other banks to ACME. She does not use wire transfer to concentrate the funds since each bank charges between $15 and $20 per day, which is incredibly expensive not to mention time-consuming.
Recently, Sam Stone, Cash Management Officer at ACME Bank, visited Anderson to take Elaine and Ben to lunch and inform them about Remote Deposit Capture. Sam highlighted the benefits of the system and how successful it has been with ACME's merchant customers. He told Ben that Wisconsin Siding, one of Anderson's competitors, was using the new technology. Like Anderson, Wisconsin Siding has multiple offices across the Midwest and was using seven different banks before Remote Deposit Capture.
Sam explained the concept of Check 21 and how Remote Deposit Capture would eliminate six banks and the associated time and expense. The simple system Sam was describing consisted of a small desktop scanner in each office where the operator spent about ten minutes each day scanning customer checks and transmitting the images to the primary bank for deposit. Sam went on to explain that once ACME received the deposit and check images, they would automatically consolidate the funds from the fifty offices into one checking account.
Elaine thought about the workflow in her department and noted that she would need two less people with Remote Check Capture, significantly cutting personnel costs. On the back of her menu, she jotted down the costs and mapped out her savings. Hmmm, she mused as she wrote:
"If each deposit requires the employee to drive an average of 13 miles and we reimburse them $.425 per mile -it costs $5.53 per deposit drop-off. Plus, we are paying for about 45 minutes extra time involved in making each deposit, which costs us an average of $9.88 per drop. Wow! The total cost of making a deposit is $15.41!
"If it costs $15.41 to make a single deposit and we have 50 offices, that comes to a whopping $770 per day just for making deposits!
"With 22 business days each month-that equals $16,940 per month and $203,280 a year."
Ben was almost in shock at Elaine's realization since he had never thought about the dollar cost of making deposits.
Sam really got Ben's attention when he discussed how Remote Check Capture would allow Anderson to make deposits on the same day checks are received. Elaine commented that the total daily deposit in all Anderson offices combined was close to one million dollars, which is a very large sum of money to be subject to deposit delays. Same day credit with Remote Deposit Capture decreases deposit time by one to two days, which would generate almost $100,000 per year in additional interest income from ACME's Money Market Mutual Funds Sweep service and streamline the Accounting Departments in every office.
Sam, Ben and Elaine sat at the table silently, contemplating the next step and thinking about future investment opportunities. They also wondered why they had not thought about Remote Deposit Capture before.
Ben spoke first, "Well no one at this table should have any question about our next project."
Remote Deposit Capture-"You knew the day would come."
The Moral of the Story
Over time, employees and managers become accustomed to the "status quo" and stop recognizing the inefficiencies that burden business each day.
"That's the way we always did it" is not a good reason to continue doing something inefficiently.
"It is always the right time to do the right thing." --Anonymous.
T. Houston Technology Group provides a full range of Remote Deposit Capture legal and regulatory documents, auditing work plans, marketing and training services for financial institutions. Since 1989, we have built a reputation based on technical quality and dedication to client service. Visit out Website at www.thouston.com.
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