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Being attuned to a client's need led Jerry Meyer to develop a financial management tool that helps retailers streamline the process of returned checks.

National retailers intrinsically understand the nightmare of managing customers’ returned checks. Financial bosses at establishments with multiple locations operating in numerous states can literally find themselves dealing with an endless list of banks in the cash-collection process, all the while tying up significant portions of their operating revenues in a procedure that can extend into weeks or months.

Fortunately, an innovative financial management tool has been available to retailers in recent years, and one of the national leaders in this “consolidated returns” business is Crestview Hills-based Bank of Kentucky, a regional institution that currently owns nearly 25 percent of the national market share in such consolidated services.

Lower costs, increased efficiencies
That banking product allows retail customers to consolidate all their returned checks into one bank, even if the organization has multiple depository banks nationwide, explained Jerry Meyer, senior vice president for treasury management sales at the aggressive, 16-year-old bank. As a result, Meyer explained, customers see numerous financial benefits that include increased collections, standardized information provided at the end of each business day, and lower costs made available through efficiencies offered by Bank of Kentucky.

“Before this service was available, companies had to go back to each issuing bank, paying anywhere from $5 to $9 for each returned check,” Meyer explained. “You can imagine how, in a big scale, with a national retailer, that could mean one customer dealing with hundreds of banks,” making cash flow management a tremendous difficulty at best for some retailers.

Meyer noted that the consolidated returns service requires customers to use a special check endorsement showing the Bank of Kentucky as the bank of first deposit. That endorsement – which is provided as a stamp or software by the bank to customers – will result in most paying banks routing the majority of returned checks to the Bank of Kentucky’s Florence operations center. From that point on, everything is a matter of efficiencies and discounts on volume.

“We’re doing this in such a large volume that we are able to offer a substantial discount to the retailer,” Meyer said. Removed from the equation is the need to reconcile payments to outside banks, adding another layer of savings. The time saved in the process – which is typically three to five days faster than handling returned checks individually – allows the customer to re-present eligible checks electronically to coincide with a customer’s pay day (typically a Friday), increasing the chances of collecting unpaid checks.

Best of all for the customer, Meyer added, Bank of Kentucky has established a simple fee structure that eliminates account maintenance charges and other service fees, focusing instead on a charge that directly relates to the number of checks processed. Customers pay less for the service than they are spending on chasing down bad checks and are able to quickly ascertain their level of exposure and bring to bear exactly the amount of funding needed to deal with it. It is, Meyer said, a win-win for the customer.

Consolidated returns services
As is so often the case with innovation, the consolidated returns service grew from a perceived need by large retailing operations near the turn of the millennium, Meyer said.

Meyer, one of the creators of the consolidated returns product, developed the concept when he was a vice president at the former Cincinnati-based Provident Bank.
 
“I was with a client in Boston, talking with their treasurer, and I asked him if there was any one thing that we could provide as a bank, what would it be.” Meyer’s client, an East Coast wholesale club with more than 100 stores, was having difficulty dealing with its bad checks. “It was a case where they couldn’t get a handle on what their exposure was on bad checks. His wish was to get all his checks processed through one centralized bank.”

After conversations with his bosses at Provident, Meyer received the go-ahead from the Federal Reserve Bank. From that genesis, Provident Bank – among a small group of financial institutions that included Bank of America and Huntington Bank – became a leader in providing consolidated returns services.

When Cleveland banking giant National City acquired Provident a couple years ago, Meyer met with Bank of Kentucky founder Bob Zapp and discussed a number of treasury-related products he believed he could develop for the Northern Kentucky firm. Meyer said he was impressed with the aggressive approach Bank of Kentucky had pursued, starting as a one-branch outfit as the Bank of Boone County and growing to 26 branches and 41 ATM sites, with assets approaching $1 billion.

“Bob has the most positive personality going, and the whole bank has that attitude,” Meyer said. He accepted Zapp’s invitation to join the Kentucky institution, bringing with him a portfolio that included nearly three decades of experience in managing treasury products and, most importantly, an estimated 120 consolidated returns customers.

Now, two years into his venture at the Bank of Kentucky, Meyer sits at the helm of one of the most impressive feats of innovation, providing a desired service to the likes of Charter Cable in St. Louis, two divisions of Cincinnati-based Kroger Company, national check aggregating services such as Global Payments and Just Checks, as well as retail firms that include national grocer Albertsons, and Mervyns, a division of Target Corporation.

Meyer noted that although Bank of Kentucky competes head-to-head in the marketplace with banking giants like Bank of America, the Northern Kentucky bank has some advantages that might not be visible at first blush.

“We can react” to changes in the marketplace almost instantaneously, he said, “which gives us a distinct advantage over really big banks that have to work through layer after layer of administrators. The attitude here, though, is we’re going to do what we need to do for our customers. Let’s figure out what to do, and then let’s do it.”

Dennis O'Connor (editorial@lanereport.com) is a staff writer for The Lane Report.