From the June 2009 issue of Treasury & Risk magazine

Payments Flow Faster

A California water district and Union Bank develop a hybrid lockbox that streamlines check processing and ensures same day credit.

A hybrid wholesale-retail lockbox is making life better for San Diego County's Otay Water District. Check payments that arrived at the traditional retail lockbox without a scannable coupon had been physically couriered back to Otay, normally resulting in a two-day delay. Further complications in posting meant that customers who had paid might have their water shut off. So Otay's finance people worked with bankers at Los Angeles-based Union Bank (UB) to develop a "whole-tail" lockbox operation with online image access. Now virtually every payment is correctly applied the same day the check hits the lockbox, reports James Cudlip, Otay's finance manager.

If a check-only payment arrives but the payer has written the water account number on the check, the lockbox staff manually enters that number, explains Shirley Choy, UB's lockbox manager. If there's no coupon and no account number, Otay has to provide instructions, usually before the daily data transmission, she says. Otay has two daily windows during which it may view exception items and send payment instructions. Typically, all exceptions are resolved before the transmission, and 100% can be applied automatically, Choy adds.


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