Nothing is easier than using mobile banking apps or desktop check scanners to deposit client payments. To avoid frustration, protect client funds, and ensure proper recordkeeping follow these tips when using remote deposit capture:
If using an app, consider adding “For mobile deposit only” to your signature endorsement on the paper check. Your bank may not require it, but including this restriction reduces the possibility that someone might redeposit the check intentionally or in error.
All banks place limits on mobile app deposits. Unfortunately, those limitations are often not communicated to customers. This issue tends to affect lawyers more than other businesses due to the type of transactions we handle. Retainers are apt to be in the thousands; settlements or other proceeds in the tens of thousands – or more. To avoid frustration, talk to your banker. It may make sense to transition to a more formal method of deposit capture (using a scanner and online deposit system). Limits still apply, but are extremely generous.
Keeping Paper Checks
Retention of paper checks after electronic deposit can be tricky. Some banks want customers to destroy the check as soon as funds appear in the account. Others require checks to be held 60-90 days. Know what your bank expects. Store deposited checks in a secure location. When eligible for destruction, dispose of paper checks in a manner that prevents fraud and protects client confidentiality and privacy.
Fund Availability vs. Collection
In most instances, firms have immediate access to funds deposited electronically, but not always. Regardless, remember that funds must be fully collected before you can draw against them. This is an absolute when it comes to deposits made to your lawyer trust account (IOLTA), and a wise business practice for your operating account.
Check Clearing for the 21st Century Act
If you are interested in the legality of remote deposit capture, known as the Check 21 Act, you can read all about it on the FDIC website.
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