A hybrid wholesale-retail lockbox is making life better for San Diego County's Otay Water District. Check payments that arrived at the traditional retail lockbox without a scannable coupon had been physically couriered back to Otay, normally resulting in a two-day delay. Further complications in posting meant that customers who had paid might have their water shut off. So Otay's finance people worked with bankers at Los Angeles-based Union Bank (UB) to develop a "whole-tail" lockbox operation with online image access. Now virtually every payment is correctly applied the same day the check hits the lockbox, reports James Cudlip, Otay's finance manager.

If a check-only payment arrives but the payer has written the water account number on the check, the lockbox staff manually enters that number, explains Shirley Choy, UB's lockbox manager. If there's no coupon and no account number, Otay has to provide instructions, usually before the daily data transmission, she says. Otay has two daily windows during which it may view exception items and send payment instructions. Typically, all exceptions are resolved before the transmission, and 100% can be applied automatically, Choy adds.

Adding wholesale lockbox features cured another headache for Otay: changes of address that were handwritten anywhere on the coupon. Otay and the bank added a change-of-address field. New addresses still have to be manually keyed into Otay's system, but now instead of having to sort through a large stack of coupons to find the ones with address changes, the bank's automatic processing isolates coupons with anything written in the change-of-address field and makes those images available to the water district, explains Randy Ungersma, the bank's vice president and senior relationship manager for local governments.