Like most businesses, apartment managers make frequent trips to the bank to deposit checks. Depending on how many units you manage, processing monthly rent payments can eat up a lot of time.

First, you have to separately enter a transaction for each check in QuickBooks or whatever accounting software you use, then you have to endorse the back of each check, then you have to fill out a deposit slip listing each check, and finally you have to drive to the bank and possibly wait in a long line to make the deposit.

I suppose most of us never considered an alternative, and we just look at it as a necessary activity. But think about how much wasted time this all takes. Think about the lost employee productivity and lost opportunities to show apartments to prospective tenants.

Today, many property management companies, especially the large ones with multiple communities, have done away with those trips by switching to electronic deposits – made right from each rental office.

They take advantage of an innovative banking service called Remote Deposit Capture that enables businesses to easily and securely process check payments directly from their business location. With the proper hardware and software, you can scan checks at your office and deposit them by transmitting digital images of those checks to your bank via the Internet without ever having to physically deliver the actual paper check to the bank. The system literally performs the check deposit right from your office.

To accomplish this, only three items are needed:

• Computer with high speed Internet access
• Check scanner device
• Software interface

The scanner has an autofeeder that reads the MICR data printed on the bottom of each check and simultaneously scans an image of the front and back of the check in a single pass. Simply connect the scanner to your computer, load the interface software, sign up with a web-based service provider, and start sending deposits.

The check images and data are sent to your financial institution in the form of an image cash letter (ICL) for deposit. At the same time, your check images are digitally archived on a secure server that you can access and search from your desktop, allowing you to find deposited checks in seconds.

“Check scanning has been virtually foolproof for us,” said Stuart Woody, comptroller for Maxus Properties. ”It’s very easy to use and quicker than manually filling out a deposit slip.”

Checking in the New Century

The very nature of checking itself is changing thanks to the wide-ranging implications of The Check Clearing for the 21st Century Act (known as Check 21), a federal law which became effective October 28, 2004.

Previously, if someone deposited a check from one bank into an account at a different bank, the banks would have to physically exchange the paper check before the money would be credited to the customer’s account. That meant that it could take as long as 7 days for a deposited check to clear and for the funds to become available. That's a long time to wait if you need the money.

Until recently, the processing and collecting of checks has been totally reliant upon the smooth operation of truck and airplane transportation. When all air travel was grounded in the days following the September 11th terrorist attacks, paper checks were not able to move through the Federal Reserve System for payment.

To help prevent this interruption of check traffic from ever happening in the future, the Check 21 law was passed, allowing an electronic image of a check to serve as the legal equivalent of the original paper check.

Under Check 21, one bank can simply scan a check and send a digital image of the check to the other bank via the Internet. Intended in part to keep the country's financial industries operational in the event of a catastrophe, the law requires that every U.S. bank must now accept electronic check images. It is important to note that Check 21 promotes a more efficient processing and clearing of checks by creating a new negotiable instrument—the substitute check.

A substitute check is a paper replacement check created from the electronic image of an original paper check. In order to meet the requirements of the Check 21 legislation, a substitute check must display accurate images of both the front and back of the original check and must contain the MICR line and all endorsements.