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5:23am EDT March 27, 2006

The Check Clearing for the 21st Century Act (Check 21) went into effect in October 2004. Check 21 allows for an image replacement document (IRD) or substitute check, to be substituted for the original check. Prior to Check 21, middle-market companies relied almost entirely upon their local banks to process check deposits for payments received from their customers. Because banks already had the technology, equipment and information systems needed to perform large-scale image capture, most companies preferred to pay banks to manage the process for them.

In response to Check 21, banks introduced remote deposit, a service that allows companies to scan the checks received on site and transmit those images to the bank where they are converted to substitute checks.

To gain a better understanding of how remote deposit has changed the landscape of receivables processing for middle market businesses, Smart Business spoke with Bert Sciulli, senior vice president and product group manager for PNC’s Treasury Management division.

How has Check 21 enabled companies to change the way they manage and process their accounts receivables?
Since banks can now accept electronic check deposits from corporate clients, companies can streamline the handling of check deposits and eliminate the time and cost associated with physically transporting checks to the bank. These electronic files are converted by the bank into substitute checks that can be deposited and processed in place of the original checks.

Why should a company be interested in remote deposit?
For most companies, making check deposits at a bank is typically a time-consuming and expensive proposition. However, by using remote deposit, companies can realize benefits such as eliminating a trip to the bank each day or taking advantage of a later deposit deadline that may improve its cash flow. Also, by getting check deposits into the payment system more quickly, a company will be notified sooner of its return checks, potentially reducing its overall collection and credit risks.

Some companies with offices or store locations that are geographically dispersed have had to maintain accounts with multiple banks to be near the branches. Companies with remote deposit can consolidate the check deposit activity from these offices and stores into a centralized account with a single bank.

What are some of the measurable benefits gained through remote deposit?
The most obvious benefit is the efficiencies that can be gained by eliminating a trip to the bank. Transportation costs are reduced and productivity gains can be achieved, as employees will no longer be making time-consuming trips to the bank. Companies can also realize cash flow benefits since most banks offer later deadlines for electronic deposits beyond normal branch hours. Having an extra hour or two at the end of the day may allow companies the opportunity to deposits checks a day earlier.

Remote deposit streamlines operations and improves the reporting and audit controls that a company may have in managing its deposit activity across multiple locations.

Are there common requirements needed for a remote deposit solution to serve middle market companies?
Typically all that is needed to take advantage of this service is a personal computer, a check scanner and access to the Internet. Software provided by banks allows companies to scan checks and create an electronic deposit file that is transmitted over a secured connection to the bank.

What are some of the concerns companies have regarding remote deposit?
One of the primary concerns that all companies should address before using a remote deposit service is ensuring that they have secure controls in place to either safeguard or destroy the original checks that they will be depositing electronically. This is necessary to prevent the original check from being processed in addition to the substitute check created from the image of the original.

Bert Sciulli is senior vice president and product group manager for PNC’s Treasury Management division. Reach him at This was prepared for general information purposes only and is not intended as specific advice or recommendations. Any reliance upon this information is solely and exclusively at your own risk.