Remittance processing - Tax processing case study

Tax remittance processing system

Digital Check created this case study to demonstrate how its scanner, and our software, solved the problem for a county treasurer. Download Tax remittance case study.pdf (262k) as Digital Check created it, or read it here.

Summary
County treasurer's office - property tax system: installs TAXMANager, a custom system to scan payment coupons and checks, read the barcode on the coupon, and create batches for review. The operators review each batch, and post each batch as it as completed. Reconciliation reports are printed, and all the day's batches are consolidated into an upload file which is transferred to the AS/400 financial system as part of the paid tax reconciliation system, integrating into the Jefferson County custom software on the AS/400.

The system handles the scanning of thousands of checks and bar-coded payment coupons per day, and utilizes an Italian scanner which not only reads the image but also the MICR code of checks in one pass. Software reads the barcode for account information, producing an upload file for the host AS/400 financial system.

The problem
County tax collectors, a revenue-generating arm of the treasurer’s office, send out thousands of property tax bills each year to the taxpayer or their mortgage company with a coupon on the bottom. Each of these bills contains a barcode or OCR area containing the taxpayer identification number and the amount due. When these coupons and the associated checks are returned to the county, the treasurer’s office must open the mail, compare the check to the coupon, add the check to the pile of checks to be deposited in the bank, and credit the taxpayers for having paid their taxes by making entries into the _self accounting system, oftentimes an A/S400.

This activity can be complex. Taxpayers can elect to pay half their taxes early, perhaps by February 28, and the remainder by June 30. In addition, mortgage companies can pay the taxes for many properties by a single check, while a group of investors in a building can pay the taxes for one property with multiple checks. The result is a difficult, labor-intensive accounts receivable process, with many opportunities for error. During the taxpaying season, January through April, thousands of checks and payment coupons are received per day.

The solution
TAXMANager by WitsEnds Software and the Digital Check TS400.

Using the Digital Check TS400 desktop check scanner, TAXMANager scans batches of checks and payment coupons into the system. Then, using 3 of 9 barcode or OCR technology, TAXMANager determines who the payee is and what they owe. One or two operators are needed to scan batches of checks. The reconciliation process can take place anywhere on the network. The reconciliation operator views each check image and enters the check amount into the system, which keeps a running “adding machine tape” total.

When the batch is finished, if it balances with what the payment coupons say it should be, then it is posted to the database. Then the “register tape” is printed as a deposit slip, and a reconciliation report is printed for the permanent file.

A batch may not balance after the reconciliation procedure, either because the operator mis-keyed an amount, or because the payee mis-paid the account typically by transposing numerals. If that is the case, then one of two approaches can be taken. The operator can fix the batch either by deleting the entire incorrect transaction, when the paid amount is completely incorrect, or by making a correction or adjustment to the batch so that it balances. Then the batch can be uploaded via ODBC to the host accounting system.

If anyone has a question later on any account, the relevant check images can be retrieved by taxpayer ID or by amount, and the results printed or faxed.

The nature of how payments are made creates its own complexities, which expand the opportunities for error in a manual system. Payments can be segregated into different kinds of batches: full payment/single payee; full payment/multiple payee; half payment/single payee, and half payment/multiple payee.

At that point, TAXMANager helps figure out how to reconcile the batches. For instance, if a mortgage company submits payment for many coupons a single check, the program reads all the relevant barcodes and calculates the correct amount for the check. The operator enters the amount of the check received. If the amounts do not match, TAXMANager analyzes the file and figures out where the error/mismatch is so that the images can be reviewed and the right answer decided upon. If a single taxpayer makes a full or half payment, and the batch does not balance, the TAXMANager’s reconciliation report will find every instance of where the payment coupon does not match the check. Then the operator can view the images, decide what the problem is, and correct the error in seconds.

Overall, TAXMANager allows users to process receipts in batches and focus human resources on the exceptions. Thus, considerable time and effort are saved between opening the mail and depositing the checks in the bank, and staff can solve problems while leaving mundane tasks to the system.

The benefits
The county obtains a variety of benefits by using TAXMANager.

Checks are deposited in the bank at least one day faster than they were before installation of the system. The county gains two days during the busy season. The county thus accrues additional interest on millions of dollars of tax payments deposited more efficiently.
One half the number of personnel are required to operate the system compared to previous manual operations.
Inquiries can be handled immediately by retrieving the check images while on the phone.
A history of payments is maintained, which can be archived to CD-ROM and stored offsite.
Using the sorter feature of the TellerScan 400, interleaved payment coupons and checks are sorted after scanning so that manual separation is unnecessary. Also, checks can be endorsed during the scan, thus saving one more step before bank deposit.

This is a specialized receivables system, but the features can be applied to any accounts receivable system where it is necessary to account for many payments, and coupons are used as turnaround documents. TAXMANager normally creates CSV files and can interface with any ODBC driver for upload to _self accounting systems.