Once upon a time, when a customer decided to pay with a check, the business receiving their payment would deliver that check to their bank for manual processing. Upon receiving the customer’s paper check from the business, the bank would then verify funds, process the payment, and deposit the funds into the business account. The merchant would then wait for the funds to clear. This process was very time consuming and often took several days to complete.
In recent years, the arrival of new technology has driven the replacement of paper checks with electronic payments. New check processing systems are now available that make it far easier to accept and process paper checks, without the time delays and inherent risk of manual processing.
How do check processing systems work?
When a paper check is received by a business, it is scanned and converted into digital format. This digital transaction is then forwarded automatically to the customer’s financial institution, who then verifies funds and approves the transaction. By using electronic check processing systems, businesses simplify the check cashing process, saving time and money and eliminating the delays and hassles of manual processing. It also reduces the possibilities of loss, theft or fraudulent activity, and allows merchants with multiple locations to digitally consolidate their operations, centralizing their funds into one business or merchant account.
Additionally, if the financial institution returns the electronic check – such as for Non-Sufficient Funds (NSF), stop payment or closed account – processors that employ electronic returns help businesses improve return and re-deposit timeframes. This saves the business money, improves their collection rates and further reduces fraud incidences.
Some check processing systems take this process even further by incorporating features which allow businesses to consolidate the processing of multiple payment forms (such as cash, check, debit and credit card transactions) into one user-friendly platform.
ETran streamlines your payment acceptance and receivable processes and eliminates your need for standard check processing systems.
Designed to be a comprehensive solution which handles all of your payment needs, ETran is a configurable platform which incorporates all forms of payment processing in one SaaS solution. It handles checks (via remote deposit capture), credit cards, ACH, and cash – immediately and automatically posting all processed payments to your bank and corporate A/R system. Its bank-agnostic, “plug ‘n’ play” capability allows the system to easily integrate with any financial institution, payment gateway, CRM system or back-office accounting solution.
ETran integrates in real-time with your accounting system, allowing you to clear and post your payments in a single pass. This streamlined, automated processing means you’ll be able to access funds more quickly, improving cash flow and increasing your bottom line. It also streamlines reconciliation, combining all payments into a single, comprehensive report, which increases financial transparency and simplifies periodical reporting.
Originally published November 25, 2014.