ePayments Corp. Cashes in on New Trend in Electronic Check Collection

Most chief financial officers and other financial operations managers are failing to take advantage of new technologies for collecting bad checks and bounced ACH (Automated Clearing House) transactions. That’s according to Paul Lufkin, CEO of ePayments Corp. Lufkin oversees the ePayments Group Of Companies providing electronic check recovery (RCK) services and electronic payments processing nationwide.

"We know that only about 20 to 25 percent of all bad checks are re-presented electronically through the ACH Network," observed Lufkin. "That means the vast majority — about 75 percent — of bad checks are still going through the slow, inefficient and more costly paper processing route, or in the case of ACH transactions, not being re-presented at all. And in a bad economy, people bounce more checks — so a company’s cash flow is strained if they’re not using the latest technology to collect on them."

Lufkin said that’s why he sees electronic check processing and electronic collection of checks as such a huge growth opportunity. In fact, according to the most recent statistics from NACHA, the Electronic Clearinghouse Association, more than 3.7 billion transactions worth more than $7.5 trillion were conducted during the quarter, representing growth rates of 8.3 percent and 6.6 percent, respectively, over the same quarter of 2007.

It’s also why Lufkin’s group of companies, including ePayments Corp’s Professional Services division and Educational Financial Services division, are continuing to provide innovative, more efficient and less costly third party processing of re-presented check collection (RCK) utilizing the ACH Network with their I-Smart Check Processing Technologies.

"Checks and electronic checking debits such as ACH transactions are not going away anytime soon," said Lufkin. "Online and other forms of payments are now part of the transaction mix, but checks and ACH transactions are still the primary means of non-cash payments and will be for a long time to come."

According to Federal Reserve Board statistics on the use of checks in the U.S., 42.5 billion checks are written annually and about 6 percent of those — or more than 250 million — are returned. Businesses are both the heaviest writers and receivers of check payments. Lufkin said that CFOs and other financial managers are missing out on millions in savings by continuing to do things the old fashioned way.

"Utility companies, for example, are still sending out a truck and two men to disconnect service for non-payment, only to turn around a few days later to go turn it back on," noted Lufkin. "In most cases, it costs them more than they can charge back to the customer since the public utilities commission sets those rates."

Industry numbers show that many businesses are still handling check collection in-house, wasting time tracking down bad checks through writing letters, making phone calls and continually following up, and then they risk losing the customer due to embarrassment.

Electronic check collection shortens the collection cycle, and re-presenting electronically allows for one extra presentment for a total of three, whereas paper checks only get two, according to Lufkin. "Businesses are clearly missing out on the opportunity to reduce costs of returned checks and ensuring no embarrassment to their customers, since the electronic process is all done behind the scenes without any personnel contact."

With an RCK service such as ePayments, Lufkin believes companies could realize cost savings of 25 to 50 percent, increase their collections rate about 30 percent and reduce the overall time spent on check collection.

There’s even a resurgence in check writing in some sectors because of the downturn in the economy, according to Lufkin. "Consumers and businesses are desperately trying to avoid putting any more of their expenses on credit cards, and small businesses and professional practices want to avoid the high costs of credit card processing."

ePayments Corp. specializes in working with schools, non-profits, governments and companies of all sizes that handle payments in the form of paper checks, electronic checks (ACH) and credit card transactions. Since U.S. banking system rules were changed to allow businesses to use the ACH and Check 21 methodologies to electronically process checks from customers, a new industry of providers has emerged to support businesses with electronic check conversion, electronic NSF recovery and related compliance services.

About ePayments Corp.
Offering a complete range of merchant check and credit card payment processing and support services, ePayments helps businesses, governments, schools and non-profits that receive non-cash payment transactions to reduce their risk while increasing cash flow. Unlike the traditional support players (such as banks), ePayments has evolved the technologies and processes associated with accepting checking payments to reduce the costs required to process all forms of payment. Services include electronic returned check recovery (RCK), electronic check conversion (ARC), Check 21 (C21) conversion, check authorization, check guarantee, check-by-phone/web, consolidated returns, Electronic Payments Compliance Assessments and credit card processing. For more information on ePayments Corp., call 303-486-0850 or visit www.epaymentscorp.com.