CHAPTER 5: CASH APPLICATION, DEDUCTIONS, AND DISPUTE MANAGEMENT
This provides a process for AR to convert paper checks to an electronic image sent directly to the bank for immediate deposit. This eliminates the need for after-hour check deposits and expensive overnight courier services. Businesses can make deposits from their own offices, using their computers, scanners, and remote deposit capture software, or by employing a third party to do it for them. The bank receives the digital check almost immediately. The bank can then send digital copies to the other banks to verify the funds and make the appropriate withdrawals and deposits, or produce an image replacement document. RDC systems allow checks and remittance information to upload directly into in-house accounting systems and to the bank. RDC also allows for centralized bank deposits for multiple company locations. The benefits of RDC for companies—from small to large—are many. Deposits are more convenient, since they’re made from the office rather than by a trip to the bank. With RDC, many banks have extended the time during which deposits can be made for the day; instead of a 2:00 p.m. cutoff time, many banks now allow deposits to be counted for that day until 5:00 or 6:00 p.m. There is also reduced cost and risk associated with no longer driving the checks to the bank, especially for larger companies that often hire a courier service or armored car. RDC can reduce costs, minimize deposit preparation time, and eliminate out-of-office time. RDC reduces the desk float time and potential for fraud—for example, where the check is just sitting on someone’s desk waiting to go to the bank—and it increases funds availability. Also, insufficient-fund checks are identified sooner. When you have large amounts of money coming in, you want to get as much of it as possible in the bank as soon as possible. Of course, for the most part this service is not free. While some banks offer it free of charge, others ask the company to pay for the check scanners. Some banks lease the scanners to their customers and charge a monthly fee for the RDC service. When making the RDC deposit, the authorized accounts receivable person, after reviewing the checks for endorsements, proper dates, and a signature, logs into the bank’s system. They prepare a deposit by entering the amounts and pertinent information into the system and then scan the front and back of each check. The scanner system provided by the bank uses handwriting analysis technology to read the check and make sure that both the numerical amount and the amount spelled out match what the AR person has entered into the system. For example, if a check is written for $100.00, the software checks that the check-writer has written “one hundred and 0/100 dollars,” and “$100.00,” and that the same amount has been entered electronically. If all three numbers match, the system continues to the next check. If there is a mismatch, the system has various protocols for correction. Once all the deposits have been entered, the total that the AR person has entered must match the total that the scanner has read. The deposit can then be sent, and a confirmation is sent once the bank receives the deposit.
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THE ACCOUNTS RECEIVABLE SPECIALIST CERTIFICATION PROGRAM E-TEXTBOOK
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