Check quality is more important than ever now that Check 21 has paved the way for banks of first deposit—or any reconverting bank in the clearing chain—to truncate original checks and transmit their digital images to the paying banks for clearing.

Whether the bank of first deposit presents a paper substitute check printed from the check's image—or just the digital image in a true image exchange process—the quality of the original paper check is important.

This period of transitioning from substitute checks to widespread image exchange is a good time for corporations to consider the importance of improving check quality and printing.

Faster, Fewer Penalties, Less Fraud
Higher-quality checks can speed check clearing and reduce delays. Conversely, a check of poor quality can slow down the process.

For example, a paying bank may return an illegible check unpaid and request another copy. The bank of first deposit must then manually search for the original check to capture a better image.

You also want to avoid costs associated with poorly imaged checks. For instance, an unreadable MICR line may result in a reject charge to have the item manually re-entered. On the other hand, quick and efficient check clearing can reduce processing costs for banks and corporations alike.

Finally, good check quality may help reduce fraud. The quicker a check clears the processing system, the better are your chances for identifying fraud quickly or stopping it before it happens.

Tips for Higher Check Quality
To ensure successful clearing, checks should be readable and image well. Corporations can follow some basic tips to promote higher quality:

Check stock. Use at least 24-pound MICR bond paper. Check processing machines can sometimes rip thin paper. Also, select white or very light backgrounds for your checks, as almost any color could distort an image. Avoid designs or patterns as well.

Check font size. Under Check 21, checks are imaged at two-thirds their original size to free up file space for MICR line data, bank information and language stating that the substitute check is a legal copy of the original. As a result, imaged checks with excessively small type can be rejected. Users of the payee match option on positive pay services also report increased false positive exceptions from illegible payee names. To offset shrinkage, Deutsche Bank requests that clients increase check font size by one-third.

Ink. Print the MICR line with magnetic ink that's thick enough. If printed too thinly, this data may be misread.

Watermarks. Watermarks and other check stock security features can actually hamper imaging. Corporations should note that most security features become ineffective when the check is digitized.

The American Bankers Association maintains standards for check printing specifications (bank management publication #147 R3). Corporations should review these standards to ensure adherence.

Test Your Checks
Whether you print your own checks or purchase them from a third-party vendor, have your bank inspect and test your checks before first use. Deutsche Bank requires that clients send 10 to 20 checks to the bank for this purpose.

First, the bank inspects the checks to confirm that all features are placed properly. Second, the checks are inspected for correct name, bank information, routing number, size and paper weight. Third, they are run through the sorter to confirm that the MICR line is readable. Finally, the bank determines if the font size of the payee name is large enough for imaging.

Consider Outsourcing Your Check Printing
Ensuring check quality is a crucial task that entails extra costs and administrative headaches. To ease the adoption of new Check 21 requirements, treasury professionals may wish to consider outsourcing check printing to their bank.

Deutsche Bank's db-check service can handle all of your check printing and fulfillment needs. A client simply transmits its accounts payable check print file to us. We then prepare the checks on secure check stock and dispatch the payments with the detail remittance information.

For more information about check quality and check printing, contact your Treasury Management Sales Consultant.