An Introduction to Check Imaging
Go to Jaguar Software.com for more information about Check Imaging, Check 21, and Item Processing.Introduction
Glossary of Check Imaging Terms
Before one can understand the strength of the Mirror Image system, one must know what processes it will be performing. While many institutions are familiar with the term “Item Processing” the term means different things at different institutions. Moreover, many institutions send their work to other professional institutions for processing and thus may not be familiar with the modern concepts of item processing. We understand this need and hope to provide assistance in this.
Modern item processing is basically made up of a four step process, whereby physical items are brought into your institution’s core banking system. (Additional secondary processes such as research, archiving, and statement printing can be considered a part of the entire system.) Whereas in traditional item processing, items where hand balanced, hand coded, captured by reader sorters, re-entered, re-balanced, sorted, and then posted, the modern system wishes to remove some of the more time consuming and tedious aspects of item processing. Let’s take a look at these general processes.
1. Capture – Today’s capture is much like traditional reader/sorter capture, yet instead of just reading the MICR information on the bottom of a check, the item is also imaged (a digital picture is take of the item) as well. Some machines not only do these two steps in the first pass but also are able to perform CAR/LAR (Courtesy Amount Recognition/Legal Amount Recognition). This means that the machine will actually attempt to read the handwriting on the check and encode the MICR amount field for you. We should mention here that some institutions have chosen to stay with an upgraded form of traditional item processing using our product called Read and Key. This product is much like traditional item processing but allows the operator to hand encode (see step 3) all of the items at capture. During the capture process the items are read by the MICR reader, Imaged, endorsed on the back of the item and then sorted into pockets based off of the type of item. Usually there are from 2 to 20 pockets which allow items to be sorted by On-us Items, Cash Letters (transit items), Internal Items (Loan, GL, Cash Tickets, etc.), and Rejects (See Item Types and Terminology). Some systems may alternatively be setup to perform what is known as “Inverse Processing”, in which the items are merely captured and are sorted on the second pass when encoding. This can be useful when doing small branch captures with a single pocket machine. Since no sort is available, the items might be then sent to a location for encode, at which time they would also be sorted.
2. Repair – Sometimes this step is further broken down into two steps called “Re-entry” and “Balancing”. The Repair process is the step whereby the operator can fix or fill in the information that is missed by the capture process. For example, if an item was not successfully read by the MICR reader, then that information could be repaired on screen after capture. Many systems allow for the re-entry of all of the errors first and then attempt to balance the transactions that remain. We discuss strategies for performing these operations in the MIRepair section of this documentation. Additionally this process can include CAR/LAR, whereby instead of running the recognition program during capture, the program is run on the capture information prior to making any repairs. MIRepair has this capability.
3. Encode – The encode process is the step that allows the operator to run a secondary pass which will encode (print MICR information onto the MICR line, usually just the check amount.) the check based off of the item information after repair has been completed. For example, a check is captured, then its amount is added on screen, then that corrected amount is then encoded onto the check. The reader will notice here that “check” is indicated rather than any item, this is because only specific checks are to be encoded and sent out for credit, these are items being drawn on other banks and are traditionally called Cash Letters. (See Item Types and Terminology) Note that new banking industry standards and laws foresee doing away with this process altogether, whereby banks will submit their checks electronically rather than physically sending their checks to the Federal Reserve or other clearing house organization.
4. Posting – After each run is captured, repaired and encoded (encoding may be optional depending on your system and the current industry standards) it is ready to be posted. Posting is the process in which the operator creates a customized system file which can then be brought into the institutions host system. This process affects the actual balances of bank customer accounts, general ledger accounts, loans, etc.
Conclusion - After Check Imaging is complete additional processes such as generating customer statements and viewing of check images online become available to your institution. Welcome to the 21st Century! The Check Imaging process, when properly organized and staffed can produce "same day" turn around for your institution. It also allows your institution to take full advantage of the Check 21!
Go to Jaguar Software.com for more information about Check Imaging, Check 21, and Item Processing.
Got to our Item Processing Glossary for more information on item processing or check imaging terminology.