Continuing with articles that help with understanding how lockbox works, the following is an article on the lockbox payment lifecycle that describes how a payment is processed from beginning to end.
As consumers, I’m sure you’re quite accustomed to the concept of paying bills. Whether it’s writing a rent check, paying your doctor for your annual physical, or mailing a donation to a cause important to you, bills are a highly recurring facet of our lives. You receive a lot of these bills in the mail, complete with an itemized list of charges, tear away payment coupon, and a handy return envelope. But what happens once you place your payment in your mailbox and raise your mailbox flag? The following article hopes to explore how your payment gets processed once it leaves your hands.
The Post Office
Not surprisingly, the first stop is through the postal system. Your payment is collected from your mailbox by your mail carrier, is brought to your local post office branch, and is placed on a truck to go to a regional mail processing plant. The payment is postmarked, sorted, and scanned by an optical character reader to capture the address on the front. Once the address is captured a barcode is printed on the front of the envelope. This barcode represents the machine-readable equivalent of the specific delivery address of your payment. This barcode enables the payment to be further sorted by automated equipment, and placed in trays with other envelopes with the same zip code.
The tray is then loaded onto an airplane and flown to the destination processing plant that supports the relevant zip code range, and then sorted and delivered to the post office branch that supports that particular zip code. It is at this point, that the lockbox provider enters the scene, where a lockbox courier works with USPS employees to retrieve all envelopes from addresses for which the lockbox service provider is an agent. The envelopes are then brought back to the lockbox facility by the lockbox courier for processing.
At the lockbox facility, the next step is to jog and open all of the envelopes received from the post office, and remove, sort and batch all of the transactions contained in those envelopes. First, the envelopes are run through a paper jogger. The jogging vibrations will ‘square’ the contents within the envelope, maximizing the chances of hassle free extraction.
Now the envelopes are ready to be opened. Thankfully we have a semi-automated way of accomplishing this. We use desk mail extraction machines called Triple Cut Envelope Openers. A picture of one accompanies this blog post. The envelopes are loaded into the hopper, and one a time, through a series of rollers, cutters and suction, the envelopes individually travel through the machine and are sliced across the top, then down each side. Eventually each envelope travels to the operator seated at the machine, where suction opens the envelope sides, making it easy for the operator to remove, sort and batch the envelope contents. Depending on the skill of the operator and the nature of the work being opened, this semi-automated process can open between 500 and 1500 envelopes per hour.
Once an envelope has been opened and its contents removed, the empty envelopes will then fall off the machine and into a recycle bin. However, just before this step, each envelope travels through a very important sensor. This sensor checks to ensure the envelopes are in fact empty. If, after mail extraction, the operator accidentally left a piece of paper in an envelope, be it a sticky note, remittance document, a letter or a check, the machine will recognize the envelope in question isn’t actually empty as it passes through this sensor. When this happens, the entire process will stop, and will not resume until the operator corrects the issue by removing the errant piece of paper and incorporating it into the appropriate transaction. In this way, we ensure we don’t inadvertently recycle and shred a document that should have been scanned in with a transaction.
In next month’s article, we’ll talk about the payment scanning, document repair, and lockbox settlement processes. Until then, if you’d like to learn more about how Lighthouse Payment Services processes lockbox payments, please give us a call!