This week, MDS installed two more Virtual Lockbox systems. In both cases, our clients were already using a traditional third party lockbox and had decided to use this system to scan the items that ended up in their office for a variety of reasons including payments returned to the lockbox without coupons and third party checks that the lockbox was unable to match to a resident’s account. These items, along with the general overflow that get sent back directly to the main property management office for one reason or another accounted for approximately 20% of their overall volume. In the past, they would have to manually perform the following tasks and data entry on these items:
- Open the Mail
- Sort checks by building (bank account)
- Enter Building Number
- Enter Unit Number
- Enter Check or Money Order Amount
- Enter Check or Money Order Number (optional, but most opt to include this)
- Print Deposit Slip
- Go to the bank to make the deposit
It is critical to note that these are the items that are most difficult to handle due to the lack of information provided when the payment was returned. An employee of the management company that is familiar with the residents is required to make an educated decision as to which residents’ accounts the payment should be applied to.
As I was training these clients, it became painfully obvious that although the benefit to scanning these items was abundantly clear, my clients were still paying big money for the third party lockbox to handle the easiest part of the workload, or the other 80% of their checks.
With the new system, the process of handling the rejected and overflow items was cut down from eight steps to just 4, resulting in a tremendous time savings plus the additional benefit of having an image of the payment easily accessible. The new process of handling the items rejected by lockbox looks like this:
- Open the Mail
- Scan the Checks
- Enter Building Number for Exception Items
- Enter Unit Number for Exception Items
Remember, steps 2 and 3 above are only required because the scanning system has no way of automatically matching a resident’s payment to their account. A user must decide which account the payment should be applied to.
Now, let’s look at what would be involved if the 80% of the items that are still going to the lockbox were being scanned in the property management office instead:
- Open the Mail
- Scan the Checks
The logical conclusion here is that since the lockbox is sending the most difficult to handle items back to you anyway, you are paying the lockbox big money to basically open your mail. These easy to handle items would be automatically matched to the residents’ accounts by reading the payment coupon or referencing the bank account number already on file using the same technology that the third party lockbox has implemented.
If you are serious about saving money, there is absolutely no reason that current users of the Virtual Lockbox would not redirect all payments directly to the main office. Is there a slightly higher labor cost involved to you? The answer is only “yes” if you are not currently paying anyone with enough time on their hands to literally open the mail. The key point here is that even though you are eliminating the cost of lockbox, it is not anywhere near 80% more work that would have to be done by your staff.
Current users of the Virtual Lockbox- If you can find someone in your office with a little bit of extra time to open the mail, you could be saving a tremendous amount of money by using the MDS Virtual Lockbox to scan 100% of the payments made by your residents.
For those of you not using the Virtual Lockbox at all and either manually entering every single payment or paying a 3rd party lockbox, the obvious question is, “Why wouldn’t you use the Virtual Lockbox?”
