Ready to refresh RDC sales? Create an end-to-end automation strategy for checks

Bundling RDC, lockbox and integrated receivables creates a winning combination for banks and businesses

Even with the proliferation of electronic payment methods, businesses still feel the pain of plain old paper checks. In fact, while check payments declined briefly at the height of the COVID-19 pandemic, their numbers have rebounded in recent months.

Each year, businesses still receive an average of 5 billion checks from consumers and another 4.5 billion checks from other businesses. That equates to nearly $19 trillion in paper receivables annually.¹

Instead of relegating checks to yesterday’s sales discussions, financial institutions (FIs) can use the persistence of checks to create new opportunities with business customers. 

A three-part solution to solve the pain of paper

The primary solutions for check receivables—lockbox and remote deposit capture (RDC)— are not new. In fact, many banks struggle to differentiate these core services in a mature market. 

FIs can reinvigorate the sales process for both products by talking about these tools not as standalone applications, but as part of a broader strategy for end-to-end accounts receivable (AR) automation. It starts by understanding the many issues that poor check handling can cause, then adding integrated receivables (IR) to the discussion.

Companies small and large struggle with similar receivables issues:

• Managing a different process and provider for every remittance type.
• Check payments that arrive outside the primary channel.
• Lack of remittance data to apply cash correctly.
• Hands-on work required to handle exceptions.
• Difficulty obtaining a holistic view of receivables. 

Individually, RDC, lockbox and IR each address parts of these challenges. When positioned together, however, there’s a much stronger value proposition for customers:

• Lockbox expedites processing of high volumes of checks.
• RDC handles “orphan” receivables that arrive in the field, at point-of-sale or outside regular channels.
• IR consolidates and standardizes check data with other payment methods, then makes digesting that information into company systems fast and easy.

It’s a three-part solution that can eliminate manual processing, accelerate cash flow, reduce exceptions and strengthen company decision-making.

Businesses ready to invest in AR automation

Strong market demand for end-to-end receivables solutions makes this a good time to expand sales efforts. Automating receivables is a top priority for companies of all sizes.

Yet according to the latest Deluxe and Strategic Treasurer research, few businesses have actually achieved their goals.

• Just one in five large businesses (19%) report high levels of AR automation.²
• Even fewer mid-sized companies (7%) have highly automated receivables processes.²

The vast majority still struggle with mixed methods or predominantly manual AR operations.

A combined RDC, lockbox and IR solution begins with checks, but addresses many receivables priorities beyond the pain of paper, including:

• Delivery of a single receivables file for checks.
• Consolidated analytics and reporting that provide a holistic view of receivables.
• Near real-time data for forecasting, liquidity management and decision-making.
• Automated remittance matching that accelerates posting.
• Greater straight-through processing that optimizes staff productivity.

Use end-to-end solutions to differentiate your FI

Combining RDC, lockbox and IR equips banks with a winning combination of services. Checks become the entry point to jumpstart discussions around receivables efficiency and automation. Even a small project, such as adding mobile RDC (mRDC) with existing lockbox customers, can generate measurable results.

These efforts can yield many benefits for FIs, including:

• Deepening relationships with valued treasury customers.
• Generating new, ongoing revenue.
• Demonstrating innovation.
• Differentiating core technologies in the market place.
• Avoiding commoditization of mature products like RDC and lockbox.

As your FI moves forward, keep in mind these important considerations.

Take a consultative approach. Selling a broader solution often requires a different set of skills beyond individual product knowledge. Make sure treasury sales reps know how to facilitate discovery with customers, listen for pain points, share best practices and help companies build the business case for larger investments in RDC, lockbox and IR solutions.

Right-size your offering. All businesses receive checks—but their use cases and needs will vary tremendously. A one-size-fits-all RDC or lockbox service can miss the mark. Instead, analyze your target market and ideal customer, then align your solutions with the needs of these specific companies. Make sure your solutions include a true business mRDC option (not a revamped consumer version) and lockbox services that can flex and scale with changing business needs.

Work with a single provider. Lastly, minimize the operational effort at your bank by working with a single fintech or receivables provider for all your RDC, lockbox and IR tools. You’ll spend less time coordinating vendors and find greater integration of services with a common receivables team.

The best receivables providers bring unmatched technology experience, deep receivables expertise and a trusted, collaborative approach. As you take your winning RDC, lockbox and IR combination to market, they’ll support you at every step with smart guidance, lead generation and sales tools, convenient implementation—and more.

Sources:

1  The Federal Reserve Payments Study 2019, Deluxe analysis

2  Strategic Treasurer, Modernizing AR Processing 2022