FINANCIAL DATA PROCESSING SYSTEM

SYSTEME DE TRAITEMENT DE DONNEES FINANCIERES

English Abstract

178/271
Patent
ABSTRACT
There are disclosed herein methods and systems for
affecting the accounting functions of debiting and crediting a
bank's account records, a payer's bank account records and a
corporation' 8 accounts receivable records with their customer's
payments, and are based upon the combination of data from two or
more sources to prepare an integrated document comprising an
invoice (bill) and a negotiable instrument, usually a bank check
These documents form an integrated document and contain all
necessary pre-printed machine readable data and are combined to
effect a variety of multi-junction transactions By combining
all of the required data elements in a single document at the
time of initial preparation of the integrated document, including
an accounts receivable invoice and the payer's check, the
requirement for subsequent redundant, labor intensive processes
are eliminated The single integrated document becomes a multi-
functional document which generates the transaction to effect the
custom's accounts receivable, the negotiable instrument to (i)
credit the corporation's financial institutions account and (ii)
debit the customer's financial institution's account while
creating a complete audit trail and accountability at each
separate processing level.

Claims

WE CLAIM:
1. An integrated billing document comprising two
portions, one portion being an invoice or billing document, and
the other portion being a check document,
the invoice document comprising a printed invoice
indicating a matter billed, and including in human readable form
a billing entity's name, a customer's name and address, the
customer's account number at the billing entity, the invoice
data, and the total dollar amount due, and
the check document being in the form of a bank check
having a first side and a second side with the first side having
printed thereon in human readable form
the customer's name and address as the payer,
the billing entity's name and address,
the bank name and address of the payer's bank,
the account number of the customer/payer at the
billing entity,
the dollar amount due as indicated on the invoice
document, and
the matter billed as indicated on the invoice
document,
the first side having printed thereon in machine
readable form
the payer's bank transit/routing number
the payer's bank account number,
the dollar amount to be paid, and
the payer's account number at the billing entity,

57



the first side of the check document further having
date and signature portions left blank to be added by the payer
at the time the check document is signed by the payer, and
the second side of the check document having printed
thereon
the endorsement of the billing entity including the
name of the billing entity,
the name of the billing entity's depository bank,
the account number of the billing entity at the
depository bank, and
the transit/routing number of the depository bank.
2. An integrated billing document comprising two
portions, one portion being an invoice or billing document, and
the other portion being a check document,
the invoice document comprising a printed invoice
indicating a matter billed, and including in human readable form
a billing entity's name, a customer's name and address, the
customer's account number at the billing entity, the invoice
date, and the total dollar amount due, and
the check document being in the form of a bank check
having a first side and a second side with the first side having
printed thereon in human readable form
the customer's name and address as the payer,
the billing entity's name and address,
the bank name and address of the payer's bank,

58




the account number of the customer/payer at the
billing entity,
the dollar amount due as indicated on the invoice
document, and
the matter billed as indicated on the invoice
document,
the first side having printed thereon in matching
readable form
the payer's bank transit/routing number
the payer's bank account number,
the dollar amount to be paid, and
the payer's account number at the billing entity,
the first side of the check document further having
date and signature portion left blank to be added by the payer
at the time the check document is signed by the payer.
3. An integrated document as in Claim 2 wherein the
check document has a second side having printed thereon
the endorsement of the billing entity including the
name of the billing entity,
the name of the billing entity's depository bank,
the account number of the billing entity at the
depository bank, and
the transit/routing number of the depository bank.

59



4. An integrated billing document as in Claim 3
wherein the check portion is detachable from the invoice or
billing document portion.
5. An integrated bill comprising an invoice or billing
document and a check document,
the invoice document comprising a printed invoice
indicating a matter billed, and including in human readable form
a billing entity's name, a customer's name and address, the
data, and the total dollar amount due, and
the check document being in the form of a bank check
having a first side and a second side with the first side having
printed thereon in human readable form
the customer's name and address as the payer,
the billing entity's name and address,
the bank name and address of the payer's bank,
the account number of the customer/payer at the
billing entity,
the dollar amount due as indicated on the invoice
document, and
the first side having printed thereon in machine
readable form
the payer's bank transit/routing number
the payer's bank account number,





the dollar amount to be paid, and
the payer's account number at the billing entity,
the first side of the check document further having
date and signature portions left blank to be added by the payer
at the time the check document is signed by the payer, and
the second side of the check document having printed
thereon
the endorsement of the billing entity including the
name of the billing entity,
the name of the billing entity's depository bank,
the account number of the billing entity at the
depository bank, and
the transit/routing number of the depository bank.
6. An integrated bill document comprising an invoice
or billing document, and a check document,
the invoice document comprising a printed invoice
indicating a matter billed, and including in human readable form
a billing entity's name, a customer's name and address, the
customer's account number at the billing entity, the invoice
date, and the total dollar amount due, and
the check document being in the form of a bank check
having a first side and a second side with the first side having
printed thereon in human readable form
the customer's name and address as the payer,
the billing entity's name and address,

61



the bank name and address of the payer's
bank,
the account number of the customer/payer at
the billing entity,
the dollar amount due as indicated on the
invoice document, and
the matter billed as indicated on the invoice
document,
the first side having printed thereon in machine
readable form
the payer's bank transit/routing number
the payer's bank account number, and
the dollar amount to be paid,
the first side of the check document further having
date and signature portions left blank to be added by the payer
at the time the check document is signed by the payer, and
the second side of the check document having printed
thereon
the endorsement of the billing entity including the
name of the billing entity,
the name of the billing entity's depository bank,
the account number of the billing entity at the
depository bank, and
the transit/routing number of the depository bank.

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7. An integrated bill comprising an invoice or billing
document, and a check document which becomes a negotiable
instrument after it is signed and dated by the payer and can
enter a check clearing process without further data being added
to the check and the check document enabling the payer's account
at a depository bank to be credited, enabling the payer's account
with the payer to be credited and enabling the payer's account at
a drawer bank to be debited,
the invoice document comprising a printed invoice
indicating a matter billed, and including in human readable form
a billing entity's name, a customer's name and address, the
customer's account number at the billing entity, the invoice
date, and the total dollar amount due, and
the check document being in the form of a bank check
having a first side and a second side with the first side having
printed thereon in human readable form
the customer's name and address as the payer,
the billing entity's name and address,
the bank name and address of the payer's bank,
the account number of the customer/payer at the
billing entity,
the dollar amount due as indicated on the invoice
document, and
the matter billed as indicated on the
invoice document,
the first side having printed thereon in machine
readable form

63



the payer's bank transit/routing number
the payer's bank account number,
the dollar amount to be paid,
the payer's account number at the billing entity,
and
the first side of the check document further having
date and signature portions left blank to be added by the payer
at the time the check document is signed by the payer.
8. An integrated bill as in Claim 7 wherein the check
document has a second side having printed thereon
the endorsement of the billing entity including the
name of the billing entity,
the name of the billing entity's depository bank,
the account number of the billing entity at the
depository bank, and
the transit/routing number of the depository bank.
9. An integrated bill as in Claim 7 wherein the bill
is in the form of a document with a check portion detachable from
the invoice or billing document portion.
10. An integrated bill comprising an invoice or
billing document, and a check document,
the invoice document comprising a printed invoice
indicating a matter billed, and including in human readable form
a billing entity's name, a customer's name and address, the

64



customer's account number at the billing entity, the invoice
date, and the total dollar amount due, and
the check document being in the form of a bank check
having a first side and a second side with the first side having
printed thereon in human readable form
the customer's name and address as the payer,
the bank name and address of the payer's bank
the account number of the customer/payer at the
billing entity,
the matter billed as indicated on the invoice
document,
the first side having printed thereon in machine
readable form
the payer's bank transit/routing number, and
the payer's bank account number,
the first side of the check document further having
date and signature portions left blank to be added by the payer
at the time the check document is signed by the payer, and
the second side of the check document having printed
thereon
the endorsement of the billing entity including the
name of the billing entity,
the name of the billing entity's depository bank,
the account number of the billing entity at the
depository bank, and





the transit/routing number of the depository bank.
11. An integrated bill comprising an invoice or
billing document, and a check document,
the invoice document comprising a printed invoice
indicating a matter billed, and including in human readable form
a billing entity's name, a customer's name and address, the
customer's account number at the billing entity, the invoice
date, and the total dollar amount due, and
the check document being in the form of a bank check
having a first side and a second side with the first side having
printed thereon in human readable form
the customer's name and address as the payer,
the bank name and address of the payer's bank
the account number of the customer/payer at the
billing entity,
the matter billed as indicated on the invoice
document,
the first side having printed thereon in machine
readable form
the payer's bank transit/routing number,
the payer's bank account number, and
the payer's account number at the billing entity,

66



the first side of the check document further having
date and signature portions left blank to be added by the payer
at the time the check document is signed by the payer.
12. A document as in Claim 1 further including as an
integral part thereof a third section comprising a maintenance
and payment option selection alternative document for allowing
the payer to select maintenance and payment options.
13. A document as in Claim 12 wherein the third
section has the payer's billing entity account number imprinted
thereon.
14. A document as in Claim 13 wherein the payer's
billing entity account number on the third section is encoded in
a machine readable font.
15. A document as in Claim 14 wherein the machine
readable font is bar code.
16. A document as in Claim 14 wherein the machine
readable font is OCR.
17. A document as in Claim 12 wherein a payment option
is payment by a credit card and the third section has imprinted
thereon an area for indicating such option.

67



18. A method of creating an integrated billing
document wherein the integrated billing document comprises (i) an
invoice including the name of the billing entity, the
customer/payer, the customer/ payer billing entity account number,
an identification of the matter billed, and the total charge, and
(ii) a check document including at least the name of the
customer/payer, the customer/payer's billing entity account
number, a bank transit/routing number and payer's account number
encoded on the face of the check document, the billing total
charge encoded on the face of the check document, and the name of
the payee printed on the face of the check document, comprising
the steps of
electronically receiving accounts receivable
information from a billing entity file, and electronically
receiving customer and financial institution information from a
control file,
electronically supplying to an automatic document
printer the identification of the billing entity, customer/payer
name and address, customer/payer biling account number, matter
being billed and the total amount, and generating therefrom the
invoice document, and including supplying the name of the billing
entity, customer/payer billing entity account number
customer/payer name and address, customer/payer bank name and
address and bank account number, and the total charge for which
the check is to be drawn, and
causing the printer to print the integrated billing
document comprising the invoice document and check document,

68



including printing on the check document the customer billing
entity account number, the bank transit/routing number,
customer/payer bank account number, and total charge amount, all
in machine readable code, on the face of the check document.
19. A method as in Claim 18 wherein said machine
readable code is MICR code according to American Banking
Association standards.
20. A method as in Claim 18 wherein the bank
transit/routing number and customer/payer bank account number are
in MICR and the customer billing entity account number is either
in OCR or bar code.
21. A method as in Claim 18 wherein the printer is
caused to print on the backside of the check document a bar coded
form of the billing entity's depository bank's transit/routing
number.
22. A method as in Claim 18 wherein the printer is
caused to print on the back side of the check document an
endorsement to the account of the billing entity.
23. A method for processing a check document in the
form of a negotiable instrument which has been dated and signed
by the payer, and which check document includes printed thereon,
the name of the payer, name of the payee, amount of the check,

69




and includes in machine readable form the prayer's billing entity
account number, payer's bank transit/routing number, payer's bank
account number and check amount, comprising
supplying the check document to an electronic code
reader and automatically reading therefrom the payer's billing
entity account number, bank transit/routing number, payer's bank
account number and the check amount for
electronically debiting the account of the payer at the
payer's bank and electronically crediting the account of the
billing entity, and electronically crediting the account of the
payer at the billing entity, and
returning the check document to the payer.
24. A method for processing a check document in the
form of a negotiable instrument which has been dated and signed
by the payer, and which check document includes printed thereon,
the name of the payer, name of the payee, amount of the check,
and includes in machine readable form the payer's bank
transit/routing number, payer's bank account number and check
amount, comprising
supplying the check document to an electronic reader
and automatically reading therefrom the payer's bank
transit/routing number, payer's bank account number and the check
amount,
electronically accessing from a data base the payer's
billing entity account number based on the payer's bank
transit/routing number and payer's bank account number for





electronically debiting the account of the payer at the payer's
bank and electronically crediting the account of the billing
entity, and electronically crediting the account of the payer at
the billing entity, and
returning the check document to the payer.
25. An integrated billing document comprising two
portions, one portion being an invoice or billing document, and
the other portion being a check document,
the invoice document comprising a printed invoice
indicating a matter billed, and including in human readable form
a billing entity's name and address, a customer's name and
address, the customer's account number at the billing entity, and
the total dollar amount due, and
the check document being in the form of a bank check
having a first side and a second side with the first side having
printed thereon in human readable form
the customer's name and address as the
payer,
the bank name and address of the payer's
bank,
the payer's bank account number,
the account number of the customer/payer
at the billing entity,
the dollar amount due as indicated on
the invoice document, and
the matter billed as indicated on the invoice
document,

71



the first side having printed thereon in machine
readable form
the payer's bank transit/routing number,
the payer's bank account number,
the dollar amount to be paid, and
the payer's account number at the
billing entity,
the first side of the check document futher having
date and signature portions left blank to be added by the payer
at the time the check document is signed by the payer, and
the second side of the check document having printed
thereon
the endorsement of the billing entity including the
name of the billing entity,
the name of the billing entity's depository bank,
the account numner of the billing entity at the
depository bank, and
the transit/routing number of the depository bank.
26. An integrated billing document as in Claim 25
wherein the check portion is detachable from the invoice or
billing document portion.

72

Description

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Patent




S P E C I F I C A T I O N




FINANCIAL DATA PROCESSING SYSTEM




This invention relates to invoicing and bill paying
processes and systems. More specifically it relates to financial
data processing systems and, in particular, to accounts
receivable billing and receipt and/or payment acceptance systems
which utilize a return remittance document in combination with a
customer initiated negotiable instrument, such as a bank check,
for accomplishing the application of funds to account receivable
records.



Typically, invoicing and bill paying processes are
accomplished through a variety of manual procedures and automated

systems; however, all incorporate a similar characteristic,
namely the preparation and mailing of a periodic customer invoice
or bill which includes a separate or detachable bill stub, or
alternately, a package of periodic payment coupons, designed to

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1288164 Patent


be returned by mail by the recipient (payer) with an accompanying
payment usually in the form of a bank check. Upon receipt by the
payee or depository bank of the incoming remittance envelope, the
contents are examined, sorted and, if acceptance criteria are
met, the two documents (bill stub or coupon and check) are
physically compared by manual or automated means, and appropriate
data is extracted and records are generated. One record is used
to apply the funds to the payee's accounts receivable. An
additional record prepares the bank check for deposit at a
financial institution for processing the check through the check
clearing network for application to the payer's account at a
financial institution and ultimately returned as a cancelled
check to the payer with the monthly checking account statement to
allow the payer to reconcile the checking account and be used as
proof of payment, if needed. This check clearing process
requires the amount of the check to be encoded with a machine
readable code by manual or automated means by the depository
financial institution preparatory to the clearing process.



The above method of processing is widely used for
routine household bill paying for a variety of products and
services. Typical uses are credit card payments, mortgage and
installment loan payments, utility payments and insurance premium


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~288164 Patent


payments. The public (corporations and individual consumers) has
accepted this method of proces~ing and this bill payment method
has become a routine procedure in most households and companies.



These processing systems, however, have certain
disadvantages. For example, the labor intensive, manual
processes that must be performed in combining the two types of
documents (bill stubs and checks) that are necessary to properly
create the application records generate many problems (called
"exceptions"). Some of the problems involve a check without an
accompanying remittance document, a remittance document without
an accompanying check, incorrect payee, stale-dated or post-dated
check, incorrect payment amount, multiple documents of either
type, restrictive notations, unidentified payee, cash payments
and third party checks. Each of these problems requires manual
decisions, special handling, and costly labor intensive
processes. Even without these problems, the proper combining of
the two documents results in duplicate, redundant processing
steps such as microfilming, control total generation, reconciling
steps, and dual audit trails. Consequently, this method of
processing is expensive, time consuming and error prone.


lX88164 178/271
Patent



Corporations that perform this type of processing
absorb the highest portion of these costs and have been
experimenting with alternative methods such as electronic
remittance processing. The Automated Clearing House (ACH)
process is one type of electronic payment system. Typically, the
customer initiates a request to the corporation to electronically
charge the customer's checking account for the exact payment on a
predetermined date each payment period. Electronic transfers are
made at that time crediting the customer's payee's accounts
receivable and debiting the customer's checking account at the
appropriate financial institution. While this process is quite
automated, consumer acceptance has been minimal and it has not
been successful on a national scale. As a result, the volumes
are low and corporations must be equipped to process in both the
electronic and the more expensive paper based modes which in turn
result in overall higher costs. Customer~, in general, have not
accepted the electronic method of payment because they recognize
that they do not control the timing and amount of the payment,
have no receipt and are unfamiliar with procedures to initiate
stop payments, to change financial institutions, or to
discontinue the service.




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1288164 Patent

Household bill paying procedures in certain European
countries utilize a single document process called a "GIRO". It
is essentially a bill or invoice which includes a return portion
to effect a funds transfer. The payer authorizes payment by
signing the return stub and indicating the payment amount, and
returning that portion to the issuer or to a central processing
service. Funds are transferred upon receipt of the document.
The accounts receivable is credited, and the payer's depository
funds are debited.



In THE GIRO method, the return portion is not a
negotiable instrument and does not provide the payer nor the
payee the legal protection afforded under the Uniform Commercial
Code. The major d fferences between the check clearing process
and Federal Reserve System in the United States as compared to
those in a European country do not allow a GIRO system to operate
within the United States. This coupled with the "central bank"
concept in Europe verses the large number of United States
commercial banks, savings banks, savings and loan associations
and credit unions (over 16,000) which provide Demand Deposit
Account~ preclude the use of the GIRO process in this country.


178/271
~.288164 Patent

An automated system which would incorporate the
essential elements of the current two documents used in
conventional remittance systems into a single document thereby
reducing the time, the labor, the documents processed, the
correction procedures needed to resolve errors, and the resultant
expenses of such processing is and has been desirable. Moreover,
such an automated system that should preserve the characteristics
and integrity of the bank check would provide the consumer and
financial institution with an unquestionable high level of
acceptance and widespread use, as well as significant economic

gains.
It i8 therefore an ob~ect of the present invention to
obviate or mitigate the above mentioned disadvantages.
According to the present invention there is provided an
integrated billing document comprising in one separable document
(i) an invoice or billing document, and (ii) a check document,
the invoice document comprising a printed invoice
indicating a matter billed, and including a billing entity's name
and the customer's name and address, and further including the
customer's account number at the billing entity and the total
dollar amount due, and
the check document being in the form of a bank check
having a first side and a second side with the first side having
printed thereon the customer's name as the payer and including
the payer's bank's transit/routing number and payer's bank
account number and further including the account number of the
customer at the billing entity encoded in machine readable form
on the check document, and including the dollar amount due as
indicated on the invoice document printed both in human readable
form and machine readable code, the check document further having
printed thereon the name of the billing entity as payee, the date
and signature being left blank to be added by the payer.

~1.28~3164

GLOSSARY OF TERMS
The following terms are used herein for clarity and
convenience.



Integrated Billing Docuoent is the document produced at the time
of account~ receivable billing or invoicing. It is typically
composed of three parts; namely, (1) a bill or invoice, (2) a
maintenance and payment option selection alternative document,
and (3) a check document. It must contain both (1) and (3)
either as one simple sheet or two separate related sheets.




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178/271
Patent




Check document (or bank check) is that portion of the integrated
billing document referred to as a unit record, negotiable
instrument or check.



Payee is the company to which the check document is payable, also
referred to as the corporation, issuer or billing entity.



Payer is the individual that negotiates the check document, also
referred to as the customer or consumer.



Remittance Proces~or processes for the payee the check document
upon its return from the payer. This may be the payee or a
financial institution or data processing servicer.



Bank is a financial institution which may be a bank, savings
association, credit union or Federal Reserve Bank.




Depository Bank is the bank of first deposit of the check
document.



Drawee Bank is the bank on which the check document is drawn.



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~.288164 Patent


Machine Readable Fonts include magnetic ink character recognition
(MICR), optical character recognition (OCR), Bar Code and all
others now or in the future.



Lockbox is a U.S. Post Office box number or address established
by the payee or the bank or data processing servicer to which all
like remittance mail is sent and accumulated for pick-up.




The foregoihg description of the two document processes
and other related difficulties of that remittance processing
method are solved by this invention which includes:



1) a novel document with a unique format, machine readable
fonts and capable of changes in function as it, or
portions of it, pass through the remittance processing
steps, and
2) a new method covering the entire remittance processing
cycle from initial data extraction, data processing,
data merging and printing through to completion of the
payment steps.




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Patent




This system incorporates the use of high speed page
printers, like the Xerox 9700 laser printer, which are capable of
producing standard machine readable fonts, such as Optical
Character Recognition (OCR) and Bar Codes as well as Magnetic Ink
Character Recognition (MICR) fonts in conjunction with suitable
computer programs to produce a formatted integrated billing
document. The document comprises up to three portions, (1) a
bill or invoice, (2) a maintenance and payment selection
alternative notice, and (3) a fully qualified unit record or bank
check. This system provides a single document which serves as
the notification to the customer of the billing details, as a
means to communicate address, bank changes, other account
selection and maintenance activity, and as a fully qualified bank
check from the customer. Consequently, the present system
eliminates the requirement of the remittance processing function
to organize, compare, handle, control and process at least two
separate documents.



The present system and method provide the flexibility,
through data base design and program logic, to produce a variety
of styles, fonts, formats and data elements to tailor the
integrated billing document to specific customized reguirements;
however, the negotiable instrument (bank check) is produced in



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Patent



compliance with industry standards (American Bankers Association
Publication 147R3 - "~he Common Machine Language").



As the integrated billing documents are produced, they
can be combined with a return envelope and prepared for mailing
to the corporation's (payee~ customers. Upon receipt by the
customer, the billing portion is separated from the bank check.
The customer dates and signs the check, thereby creating a fully
negotiable instrument, and places the check in an envelope for
return mail.



Upon receipt of the mail at the corporation or at their
depository bank (i.e., "lockbox") through the postal system, the
envelopes are opened and the enclosed checks are grouped
("batched") to prepare a deposit to the corporation's account at
a financial institution. The fully negotiable check contains all
of the necessary information in machine-readable characters to
pass through all financial institution's processes that are
performed in the various stages of the check clearing process.
In addition to the reguired information printed on the check,
including the payment amount, the depository bank's standard
endorsement can also be printed on the back of the check at the
time of initial document preparation along with the customer's



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accounts receivable number or a composite of that number in
machine readable characters printed on the face of the check and
subsequently used to update the corporation's account receivable
system.



Upon receipt of the corporation's deposit at their
financial institution, conventional standard data processing
methods used in a bank's check processing operations perform the
validation microfilming, capture and pocketing of each of the
checks which comprise the deposit. As a by-product of this
operation, the remittance data, including the customer's accounts
receivable number and amount paid, is temporarily placed on
storage devices preparatory to transmission of the data to the
corporation. This data, when received, is used by the
corporation's accounts receivable system to automatically update
each customer's account receivable record with the payment data.
Also, as a by-product of the bank 1 8 normal processes, the
microfilm images of both the front and back of the checks are
prepared for delivery to the corporation for archival and problem
solving ("research") purposes. The checks then proceed through
normal check clearing operations through the nationwide network
of banks and Federal Reserve processes to distribute the check to
the bank where the customer's account is located. Ultimately,


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Patent



the "cancelled" check is returned to the customer in the monthly
statement of account.



Through other aspects of the process, the same system
accommodates many ancillary processes, such as automated stop
payment, automated return item handling, and automated
overpayment reimbursement, through the use of appropriate machine
readable codes. This system, which incorporates data, that has
historically required two separate unique documents, into a
single, multi-purpose document, provides all of the functionality
of the conventional system, but in a highly efficient, economical
manner.



Savings are realized by the major reduction in
personnel costs through the reduction of half of the incoming
document volume (elimination of the bill stub), the associated
reduction of labor $ntenQive operations (comparison of bill stub
and check amount and encoding amount on check), elimination of
equipment, file storage, floor space and administrative overhead.
The reductions are outlined below and illustrate a savings of
about 50 percent.




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CONVENTIONAI. REMITTANCE PROCESSING
Nanage~ent (5%): Supervision, administration, reporting,
customer service.
Mail Functions (5%): Collect, mail sorting, open.
Insp~ction (10%): Review, examine, segregate, batch, log.
Re~ittance Proce~sing (45%): Reading/scanning, encoding,
endorse, capture, microfilm.
Control (15S): Balance, verify, adjust, reconcile, prepare
deposit, data preparation, data transmission, store or destroy
bill stub.
Exception Processing (20%): Irregular, unreadable,
correspondence, unprocessable, stop payments, returns.



NEW METHOD OF REMITTANCE PROCESSING
Nanage~ent (5%): Supervision, administration, reporting,
customer service.
Nail Functions (5%): Collect, mail sorting, open.
Inspection (5%): Review, examine, segregate.
RenittancQ Processing (22%): Reading/scanning, capture,
microfilm.
Control (8%): Balance, verify, adjust, prepare deposit, data
preparation, data transmission.


~.288164 178/271
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Exception Processinq (5%): Correspondence, stop payments,
return~.
The integrity of the initially prepared document is
retained throughout the entire process, which results in the
reduction of labor needed to recreate the data as it proceeds
through the various stages of the process, thereby eliminating
costly exception procedures, balancing steps, reconciliation, the
need for audit and document storage and handling. Through this
process, it is expected that other remittance costs will be
reduced through earlier payment receipt time, lower bank check
clearing charges and reduction of, and more rapid response to,
customer inquiries.



Controls are incurred as a result of the integrated
single document printing proces~ that assures the payee that its
accounting records are update~ from source documents which it
originated. The payer is assured that the payment made to the
corporate service provider is accurate and receipt of the
cancelled check document represents proof of payment. The check
document can be printed by tho payee with control features such
as restricted endorsements and alternative return address that
facialitate rapid and accurate posting of payment to the payer's
account.


~.288164 Patent




Em~odiments of the present
invention will become better understood through a consideration
of the following description ~y way of e~ample only taken in
con junct;on with the drawings.

~ 28~164 Patent



Figures la and lb show one form of an integrated
billing document, with Figure
la showing the front and Figure lb showing the back thereof.



Figures 2a and 2b illustrate details of the unit record
or bank check;



Figure 3 is a flow chart illustrating how the accounts
receivable update, printing and mailing of invoices is performed;




Figure 4 is a flow chart illustrating a typical set of
the detailed processing steps for returned ("incoming")
remittances as presently conducted in conventional financial data
processing systems.



Figure 5 is a flow chart illustrating the detailed
processing steps for returned ("incoming") remittances in
accordance with the present invention and, in comparison with
Figure 4, shows the efficiencies, labor reduction and cost




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~.Z88~64 Patent


reductions available by practicing the concepts of the present
invention.



Figure 6 is a flow chart illustrating the detail of the
check processing functions.



Figure 7 is a flow chart illustrating the detail of the
non-paid check processing functions.



Figure 8 is a flow chart illustrating control file
maintenance processing functions.


~.Z88164 Patent


Turning now to a detailed description of the concepts
of the present invention, and exemplary embodiments of the
method, system and documents involved, the integrated billing
document will first be described, and particularly the unit
record (namely, the fùlly negotiable bank check) thereof. The
integrated billing document as shown in Figure 1 comprises the
three parts previously discussed, the invoice or bill 10, the
maintenance and payment selection alternatives 11, and the unit
record or negotiable bank check 12. The check or unit record 12
is shown in greater detail in Figures 2a and 2b, with Figure 2a
showing the front side and content thereof, and Figure 2b showing
printed endorsements on the back of the check 12.



The unit record 12 contains all of the standard
information commonly printed on a personalized consumer check.
This standard information includes the full name and address of
the account holder (payer) 14, th- full name and address of the
financial institution (drawee) 15, which may be a bank, savings
association, or credit union, a seguential check number or
reference number 20, the fractional form of the financial
institutions transit/routing number 25, and the magnetic ink
(MICR) form for the payer's bank account number 30 and the drawee


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transit/routing number 35. Areas are set aside for the payer and
include the date, written dollar amount, numeric dollar amount,
signature, and payee's name.



At the time of producing the periodic customer's
accounts receivable bill or invoice 10, the standard information
described above is retrieved from a data base (customer and
financial in~titution control file), formatted and printed by use
of a page printer with magnetic ink capability (e.g., laser
printer of Figure 3). The data base contains the following data
elements: customer name and address 14, customer's bank name and
address 15, customer's bank account number 30, and bank
transit/routing number 25 and 35. Other coding within the data
base specifies the type of integrated document to be produced,
certain characteristics of the bank, stop payment status and
delinquent or prepaid status.



According to the present sys t e m, additional data
extracted from the data base is al~o printed on the unit record
12, and include~ the payee name, address or Post Office Box
number, city, state and zip code 40, optionally a machine
readable payment code 41, the amount due in written form 50 and
numeric form 55, the customer's accounts receivable number (for


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the payee or billing entity) in the form of magnetic ink
characters 60 or optionally in optical character recognition
(OCR) characters or bar code fonts 65. The amount due also is
printed in magnetic ink 70, or optionally optical characters or
bar code 75. All this information is formatted and printed on
the unit record under the control of the customer and financial
institution data base in combination with the accounts receivable
file as is further explained in connection with Figure 3.



The corporation's standard endorsement~ can be printed
on the reverse side of the unit record as shown in Figure 2b.
This information, composed of payee's account styling data 80 and
variable endorsement data 85 are retrieved from a file which
contains the endorsement information for one or more of the
specific depository financial institutions selected by the payee
as its depository. A bar code, e.g. to satisfy Federal Reserve
requirements, 87 can also be included on the reverse side in
addition to the numeric representation 86 of the routing number,
such as is shown in Figure lb.



The invoice/billing information 10 part of the
integrated document of Figure l contains customized data as may
be required by the issuer. It contains the payer's name and



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address 90, the payee's name 91, the customers account number at
the payee 92, billing or invoice date 93, and total amount due
94. Optionally, prior payment transaction details may be shown,
and current payment details may be shown, as well as alternate
payment plans, account status and other information that is
appropriate based on generally accepted billing practices.
Additionally, this part 10 of the integrated billing document may
include the offering of inducements to encourage the customer to
use the unit record 12 payment alternative.



The maintenance and payment selection alternatives
section 11 of the integrated billing document allows the payer to
indicate alternative methods of remitting payment and to provide
information for an address change and a bank account change. It
contains variable data dependent on the options allowed by the
payee. At a minimum, the payee's printed name and address 95,
and the payer's account number 96 in human readable, and
specifically machine readable, font are included. Optlonally the
form 11 may contain a credit card payment authorization 98, as
well as name and address change data on the reverse side (Figure
lb) and bank account change data on the reverse side. For
customers electing not to use the unit record, this section 11




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replaces the billing stub in the conventional remittance
processing systems.



When the customer receives the integrated billing
document (Figure 1) including the bill or invoice 10 and unit
record 12, the customer dates the unit record 12 at g0 and signs
the same at 95, thereby creating a fully negotiable instrument.
The unit record 12 is placed in a return envelope (not shown)
preferably so constructed as to display the payee name, address
or Post Office Box number, city, state and zip code 40 in a
window opening for postal delivery to the specified address.
Through suitable program instructions, a corporation may choose
to direct the mail to one of several locations (e.g., "lockbox")
by printing a suitable address or Post Office box number and
destination on the unit record 12. This allows the unit record
12 to be sent to the most advantageous remittance processing
location based on variable factors, such as for example, customer
location, mail times, amount of check, alternative processing
facilities, account delinquency status, and so forth. This also
allows the corporation to reduce mail time float, accelerate the
check clearing process, enhance controls and reduce bank check
collection fees.


~.Z88164 Patent

Upon receipt of the envelope containing the unit record
12 at the corporation's location or the corporation's depository
financial institution, the unit record 12 is extracted and
prepared for deposit at tho corporation's depository financial
institution. Depending on the corporation's processing
environment, the unit records may be processed through standard
remittance equipment that can read, validate and extract data
from the machine readable portion of the unit record 12 to
prepare a file to update their customer's accounts receivable
records, or alternatively the corporation can present the unit
records to their depository financial institution to extract the
machine readable data and prepare a file for subsequent delivery
to the corporation for updating the accounts receivable file.
The later method utilizes standard financial institution methods
and procedure~ to accommodate the capture, validation and
extraction proces~. During this process, the unit records are
microfilmed and a cross-referenco index is prepared that is used
by th- corporation for customor $nquiry and r¢search purposes.
The unit rocords are routed to their final destination, the
drawee financial institution, through the normal check clearing
process for payment against the customer's checking account.




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In the event that the customer has issued a stop
payment against the unit record, or the unit record is drawn
against uncollected funds, the account is closed, insufficient
funds exist in the account or for any other non-payment
condition, the unit record 12 is returned, in its original form,
through the normal return item clearing process to the financial
institution of first deposit. The financial institution uses the
unit record, in its original form, to reduce the payee's account
balance and to automatically prepare a reverse transaction that
will affect the payer's accounts receivable record. Computer
interfaces between the accounts receivable file and the customer
and financial institution control file recognize this situation
and automatically produce status code changes to reflect this
condition.



The maintenance and payment selection form 11
containing notification of customers' address changes and/or
drawee bank changes may be received in the incoming envelope
along with the unit record. These notifications are used to
maintain the customer and financial institution's control file
through an on-line interactive maintenance program. Bank name
and address changes are maintained by computer interfaces between
the customer and financial institutions control file and the data


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~.288164 Patent

base of financial institutions such as that supplied by Rand-
McNally and Company. Maintenance regarding adding new customers
and customers to be deleted is received through input forms (not
shown) and accommodated through the same on-line interactive
maintenance process.



For the present sYs t e m, the maintenance and payment
selection form 11 replaces the bill stub of the conventional
remittance processing system if the customer pays by personal
check, money order or cash. The address 95 on the payment
selection from 11 will be different than the address 40 on the
unit record 12 and will, typically, not be the same address, i.e.
"lockbox", where the conventional remittance bill stub and
personal check would be sent. Customers who continue to pay with
personal checks will be given incentives through a variety of
marketing efforts, to use the unit record. For those who chose
not to use the unit record, their payments will continue to be
processed in the conventional manner.



An additional customer benefit of the present invention
is the ability to print the payee's name on the unit record 12 as
indicated at 40 in Figure 2a. Althouqh the security aspects of
printing the payee's name on the endorsement is apparent from


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Patent



Figure 2b, it can be useful to include the protection to the
payer by having the payee's name on the face of the unit record.



There are numerous instances of checks being received
through a lockbox where the "pay to the order portion" is left
blank. These type checks have been known to be segregated by
lockbox personnel and deposited to a fraudulent account set-up
for that purpose. In other words, the lockbox employee completes
the check by adding the name of a "dummy" payee account and
subseguently deposits the checks and periodically withdraws the
funds. The situation is not discovered until the payer receives
a notice of delinquency. The integrated printing of the invoice
and the unit record, with the payee name and payee's endorsement
included, virtually eliminates any chance of this type of fraud.



Figure 3 illustrates how the printing of the integrated
billing document is performed from customer and bank files and
how the accounts recQivable selection and extract and mailing of
invoices is performed according to the P r e s e n t m e t h o d .
Figures 4 and 5 show the detailed processing steps
for incoming remittances in the conventional and new processing
methods, respectively. The reduction in required processing
steps in the present method (Figure 5~ as compared to the



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178/271
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conventional method (Figure 4) i~ indicative of the efficiencies,
labor reduction and cost reduction created by this invention.
Figures 6 and 7 provide further detail of the check processing
functions and non-paid check processing functions respectively,
and Figure 8 illustrates control file maintenance.



Figure 3 is a flow chart which illustrates how the
accounts receivable selection and extract, printing and mailing
of invoices is performed according to the present method. Set
forth below is a brief description of each of the elements of
Figure 3 (the identification numbers in Figure 3 correspond to
the paragraph numbers set forth below).



1. Receive accounts receivable data to perform
accounts receivable selection and extract process.
2. Receive unpaid item data for items that have failed
to reclear.
3. Computer processing to interface, match and extract
required data from the previou-~ly updated customer and control
file data base and update customer and control file data base
with current accounts receivable data.




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~ 288164 Patent


4. Process accounts receivable selection and extract
system and generate data for acceptance into a credit
authorization process, such as MasterCard and VISA.
5. Print integrated billing do~uments depending on
corporation control file parameters and selection criteria.
Printer must be capable of printing all required machine readable
codes, e.g. MICR.
5a. Integrated billing document with pre-printed
amount.
5b. Integrated billing document without pre-
printed amount.
5c. Integrated billing document with pre-printed
refund or rebate check.
5d. Integrated billing document with notice of
credit card transaction.
6. Prepare integrated billing documents for mailing.
7. Mail integrated billing documents.



Figure 4 is a flow chart illustrating the processing
steps for incoming remittances in conventional processing systems
(with the identification numbers corresponding to the paragraph
numbers below).




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1. Collect mail from Post Office Boxes.
2. Open envelopes and extract contents.
3. Review and inspect contents to determine which
remittances (bill stub~ and checks) are processable and which are
unprocessable. Batch bill stubs and checks in control groups.
3a. Perform exception processing procedures for
unprocessable remittances, correspondence and
other non remittance documents.
4. Examine the checks for negotiability and
acceptability.
4a. Perform exception processing procedures for non
negotiable checks.
5. Verify the amount remitted on the check with the
remittance document (bill stub).
5a. Perform exception processing procedures for
irr-gular payment~, i.e. amount remitted not equal
to amount billed.
5b. Perform exception processing for unreadable
remittance documents.
6. Encode check with dollar amount and prepare control
totals.
7. Capture remittance document data for transmission
for subsequent updating of account receivable files.


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~.288164 Patent


8. Endorse the remittance document with audit trail
information and the check with the standard endorsement.
9. Microfilm remittance documents and/or checks.
10. Balance the remittance documents to control
totals.
11. Perform stop payment verification processes.
12. Prepare deposit documents.
13. Deliver deposits to the depository financial
institution.
14. 8atch bill stubs or coupons for storage or
destruction.
Figure 5 is a flow chart which details the steps for
incoming unit record remittances according to the present method,
and particularly illustrates the
significant simplification available through the practice of the
prQsent invention in comparison to the conventional processing
steps of Figure 4 (again, the numerals in the figure correspond
to those below).
l. Collect mail from Post Office boxes.
2. Open envelopes and extract contents.
3. Segregate maintenance forms and correspondence.
4. Encode dollar amount on checks with no pre-printed
amount.


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5. Prepare deposit documents
6. Deliver deposit to depository financial
institution.



Figures 6 and 7 illustrate detail of the check
processing functions and non-paid check processing functions,
respectively, and Figure 8 illustrates control file maintenance
(with numerals therein corresponding to the numbered paragraphs
below). Figure 6 illustrates the financial institution check
clearing processing functions.



1. Receive pre batched deposit with accompanying
control totals.
2. Perform normal check processing operations which
include: Validate, microfilm, endorse, capture, pocket deposited
checks, and correct and re-enter re~ected checks and reconcile
checks to control totals of deposit documents.
3. Prepare cash letters to clearing financial
institutions and Federal Reserve banks.
4. Dispatch cash letters to appropriate sending
points.
5. Extract and develop microfilm images of checks.




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6. Prepare crosC reference listing of checks in
account number sequence.
7. Extract remittance data for subsequent updating of
accounts receivable file.
8. Return microfilm and cross reference list to
issuer for research purposes.
Figure 7 illustrates the non-paid check processing
functions as set forth below.
1. Receive non-paid checks from payer's financial
institution (bank function).
2. Attempt to re-deposit and re-clear non-paid items
(bank function).
3. Return non-paid checks to the issuer or depositor
(bank function).
4. Using the original unit record (check) to
automatically create a reversal transaction that generates a file
for subsequent account~ receivable update processing.
5. Prepare notification of non-paid check to payer.
6. Prepare optional notification to credit bureau and
collection departments.



Figure 8 illustrates the maintenance update functions.
1. Receive maintenance forms.

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2. Receive new accounts and closed account maintenance
forms .
3. Prepare maintenance for input to customer and bank
control file.
4. Enter maintenance activity to customer and bank
control file.



As will be readily apparent to those skilled in the
art, implementation of various aspects of the present method and
system preferably is accomplished through the use of conventional
data processing equipment and suitable computer software
proqrams. The foregoing description of the inteqrated billing
document, as well as the various steps involved in creating and
processing this document and the unit record itself will make it
apparent to those ~killed in the art how to develop the suitable
programs, there being numerous modifications and variations which
will be possible because of the particular requirements of the
payee and banking institution and banking channels involved.
Even 80, set forth below is a further discussion of the software
for accomplishing the presen t me t hods. The
software preferably is designed to be generic in that it has the
facility to function in a standard manner, but utilizes
customized options and parameters that tailor the standard


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processes for specific requirements desired by the individual
corporation (payee) and by the depository financial institution.



There are three primary computer software systems;
customer an financial institution control file sub-system,
accounts receivable selection and extract sub-system, and
reader/sorter sub-system. The detailed description of each of
these sub-systems is as follows.



Customer and Financial Institution Control file Sub-system
This system includes the functions of generation of the
initial customer and financial institution control file data base
from source data and from the extraction of data from other data
bace sources and the periodic update and maintenance of the data
base. The contentY of the file includes such elements as:



Fixed Data Base Elements Sources
Customer name and address Accounts receivable file

Financial institution name Financial institution data
and address base

Accounts receivable account Accounts receivable file
number


Transit/Routing number Financial institution data
base

J.28~164 Patent


Financial institution Source data
customer's account number
Payee name Corporation control file
parameters
Payee format control code Corporation control file
parameters
Refund/Rebate option code Corporation control file
parameters
Variable message data Corporation control file
parameters
Billing sequence code Corporation control file
parameters
Endorsement financial Endorsement control files
institution styling and description
parameters
Payee destination (Post Destination control file
Office box, instructions) city, state and zip

Variable ~ata Base Elements
Billing cycle code Accounts receivable file
Current billing amount Accounts receivable file
Prior billing amounts Accounts receivable file
Past due code Accounts receivable file
Delinquent code Accounts receivable file
Customer option selection Source data
code
Variable payment option Source data
Billing period code Accounts receivable file

~ 2881~ 178/271
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Certain data elements within the file may be updated
through on-line interaction maintenance transactions that may
add, delete or change certain data elements within the customer
and financial institution control file.



The primary key to accessing the file is the
combination of the customer's financial institution
transit/routing number and the associated customer's account
number. For inquiry purposes, the contents of the file may be
accessed by customer name, customer partial name, customer
address, accounts receivable account number, billing amount or
certain combinations of the above.



The file is used to produce billing activity reports,
statistical data, various types of management reports and usage
statistics. The integrity of the file i8 maintained by the
generation of internal record counts and other types of control
totals. Acces~ to the file is controlled by multi-level security
codes which prevent unauthorized use.




The customer and financial institution control file
data base is also accessed prior to the accounts receivable


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Patent

posting proc-ss to verify the incoming accounts receivable
payment tran6actions and to reformat those records to be
compatible with the types of records reguired for accounts
receivable posting

Accounts Receivable Selection and Extr~ct Sub-Svstem
The primary purpose of this ~ub-sy~tem i8 to select the
appropriate accounts receivabl- record~ for the billing period
and compare those records with matching data available on the
cu6tomer and financial institution control file data base The
match is performed on the account rec-ivable account number m e
matching record~ are extracted ~nd formatted a~ determined by the
payee format control code, the variable me-~age code, the
financial institution ndor--ment ~tyling and description file
and the pay-e de~ignation instruction~ Upon completion of the
xtraction proce-~, th~ ct-d r-cord~ are ~equenced according
to tho billing -guenc- code which egr g~tes th- ~-lected record
by zip code and type and for~at of bill to be produced (check
with amount, check without ~mount, refund/r bate check, cr-dit
card billing)

These record~ are then r l-a-ed to a la~er printer
(Figure 3), such a~ a Xerox 9700, which u-es standard ~oftware to

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* Trademark

~2 88~64 Patent


produce the integrated billing document (Figure 1). Control
totals and record counts are prepared to ensure that all billing
information, item counts, and record counts agree with previously
produced totals that were generated from the corporation's
accounts receivable system.



An additional function of this subsystem is to verify
the incoming accounts receivable payment transactions and to
reformat and append data matched and extracted from the customer
and financial institution control file data base for acceptance
in the accounts receivable posting process. Reports are
generated listing exception conditions such as unmatched
payments, incorrect amounts paid, past due payments, delinquent
payments, and the like. Other reports are produced for control
purposes and for statistical reports such as elapsed time from
billing to receipt, payment by type of billing to receipt,
payment by type of billing method, overpayments, and so on.



Parameter accessible control features are provided that
allow authorized users to obtain marketing, financial and/or
agency compliance images from the laser printer. These parameter
driven capabilities will also allow authorized users to implement
various marketing incentive programs that can be rotated through


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Patent




the customer print file to reward and increase the unit record
usage by customers.



Reader/Sorter Sub-System
This sub-system is designed to extract the Magnetic Ink
Character Recognition (MICR) data, and if required, other machine
readable data, from the data set (referred to as the mass data
set when reader/sorter equipment such as an IBM 3890 is used for
check capture~. The sub-system selects the proper string of data
by recognizing the corporation's financial institution's account
number that is printed in MICR form on the deposit document
preceding the checks. The extracted data is placed on an
intermediate ctorage device, such as a magnetic tape, for
subsequent delivery or transmission to the corporation. This
data is then reformatted and matched with the customer and
financial institution's control file on a key derived from the
combination of payer's bank' 8 transit/routing number and payer's
bank's account number and, if present, payer's account~
receivable account number.



Control totals are prepared to reconcile the extracted
data to the deposit amount previously provided. The sub-system
also provides the means for the financial institution to prepare



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a cross-reference list rrom the extracted data that is sequenced
in such a manner as to r-f~ronce the location of the m$crofilm
image of each check The mlcrofilm is produced as an automatic
by-product of the capture proce-s when using equipment uch as an
IBM 3890 reader/sorter The ~icrofilm and cross reference report
may be produced on hard copy or microfiche and u~ed for
researching custcmer inquiries and for archive purpose

Consolidated capture fil- information i8 balanced and
transmitted to the payee's account receivable system for customer
accounting updates This information is further posted to a cash
management control system that contains the depository bank's
availability ~chedule The matching of collectod unit record6
and funds availability guidelines erve~ to accumulate to daily
cash balance totals owed the payee for immediate drawdown or
accumulations to ruture availability total~ for out of area unit
r-cords A r-conciliation runction i~ also perrorm-d in this
yst m to match unit r cord i~uo *ile with paid file
information Thi~ matching proce~ rve~ to provide guality
control over tho ~ICR printing ~-ature~ Or the la-er printers in
use and reader orters in u-e by the depo-itory bank The
matching proce~- al-o provido- accurate ~oasure- of the delays
from date of creation to date of fund~ receipt to update cash

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forecasting capabilities in this system. This forecasting module
allows authorized users to interrogate the system to isolate
which incentive campaigns are most effective in generating unit
record usage by customers. Another control feature of the system
is the monitoring of accumulated earnings from the various
sources such as reduced internal costs, lower bank fees, quicker
cash collection, etc.



Summary of Steps
A. The present system and method can
be characterized as one which involves the creation and use of an
integrated billing document which includes at least two portions;
namely, an invoice or bill, and a check document, each of which
have printed and encoded thereon certain particular data
pertaining to the payee, payer, the amount of the bill, the
payer's account number and the payer's accounts receivable
number. Additional data may be included such as the payee's
name, payee's coded account number, and so on. The integrated
billing document also may include maintenance and payment
selection alternatives.



B. In creating the integrated billing document, two
sources of data are combined. The first is information from the


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customer (payer) file, (e.g., a cable TV customer). This
information includes items such as the customer's bank account
number and transit/routing number, billing account number and
other appropriate identifications. The second source of
information includes variable information and which basically
comprises the accounts receivable information for the billing
company (e.g., a cable TV company).



C. The integrated billing document (Figure 1) is
created from the foregoing information (Figure 3). This
document, as noted above, includes the invoice (indicating the
services performed and the charges) and the check document
itself. It also can include payment options (e.g., check off
blocks to pay by credit card or by personal check). This overall
integrated billing document is created by a high-speed printer,
such as a laser printer (Figure 3), and includes the appropriate
MIC~ codes and/or OCR and/or bar codes on front and back of the
check document portion for bank account, accounts receivable
account, endorsement and the like.



D. The customer (payer) receives this integrated
billing document, reviews the same, and selects a payment option.
If he selects the unit record, he then signs and dates the check


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document, and returns the check document in a supplied return
envelope. Typically, the return envelope has a transparent
window such that the return address of either the unit record or
the maintenance and payments option form may be read.
Additionally, information required by or enabling more efficient
processing by the U.S. Postal Service may be printed on the
check, payment options form or the envelope, e.g. bar code which
enables machine reading and sorting. The customer does not have
to fill in any other information, nor does the custo~er have to
use a conventional check.



E. After mailing, the check document part of the
integrated billing document is received at a designated location,
typically referred to as a "lockbox," which is at a predetermined
location either at a bank or at the billing corporation. This
lockbox location preferably is ono which only receives these
check documents for allowing subsequent automated processing.



F. The check documents from the lockbox are sent to a
reader/sorter or other remittance equipment at that predetermined
location which reads three or optionally four sets of
information; namely, the customer's (payer's) account number,
amount of check, and the customer's accounts receivable account


178/271
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numbex (if present), and the financial institution's
transit/routing number. The system and method according to the
present invention interpret this information. The customer's
accounts receivable account number and dollar amount allow the
accounts receivable file to be updated. The customer's (payer's)
account number and transit/routing number from the check, along
with the dollar amount which are read, allow, via suitable
software pxogram, the system to now proceed through normal
automated check clearing processes.
G. The system and process include other fail-safe
features, such as the automatic processing of return items, stop
payments and the like, but the preceding-described steps comprise
the main overall processing steps.
H. The system and process include other features that
provide internal control, management information and performance
tracking.



Features and. Benefits
The present integrated billing document and methods
provide numerous features and benefits,
particularly including those described below.




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A document is created with the properties to completely
identify all neces6ary elements to completely effect the
application of payments to an issuer's accounting process, the
depository financial institution's accounting processes and the
drawee financial institution's accounting processes, and the
ability to automatically convert that document to a negotiable
instrument acceptable to, and capable of being automatically
processed by all financial institutions, upon authorization by
the payer. The necessary elements include, but are not limited
to, the unique account number for payment, the unique dollar
amount for payment, the unique alternative return address, the
unique alternative payee designation, control codes, the unique
alternative endorsement characteristics for payment deposit and
the unique payment period identifier for which the unit record is
proof of payment.



The integrated document comprises a portion devoted to
invoice/billing information, a portion devoted to maintenance and
payment selection alternatives, and a portion devoted to a unit
record for funds transfer. The method of creating the integrated
billing document uses data extracted from multiple sources,
including, but not limited to, corporation accounts receivable
files and customer and financial institution control files to


lZ88164 Patent


produce the integrated document containing variable contents and
in a variety of formats designed specifically for automated entry
into the existing check clearing network without any further
modification or pre-processing.



The syst0m incorporates a combination of ingredients,
including the unit record along with databases, software,
computer, reading and printing technologies described herein to
effect a more efficient and accurate remittance process.



The unit record incorporates multiple machine readable
fonts, optionally in OCR, Bar Code or MICR, in any combination
that can be automatically processed by equipment, such a~ IBM
3890 Reader/Sorter or Computer Entry Systems 9400 Remittance
Processing terminals. A ~ingle document i8 used to generate
multi-function automated transactions rather than multiple
separate documents as used in conventional methods to effect the
account posting process, the financial institutions check
clearing network, the remittance processing and the return items
processing.



The unit record incorporates a machine readable payment
code 41, optionally in OCR or Bar Code font, that allows



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~.288164 Patent


immediate identification as to whether the unit record payment is
current, late or dslinquent. This automatic identification
allows the segregation of unit records according to billing
period which expedites the process of accepting late or
delinquent payments with or without a late charge, late payment
penalty or possible return to payer in the case of delinquency.



The present method al lows for m~lltiple
machine readable fonts, such as but not limited to MICR, OCR and
BAR codes, to insure accuracy of information lift and account
file update. For example, the unit record can contain redundant
information in MICR and OCR fonts. Remittance processing
eguipment can read both at the same time and compare values to
guarantee accuracy. Alternatively, the unit record can be
printed in the size of a personal check with the check amount,
payer bank account number and transit/routing in MICR along the
bottom of the unit record and the payer's payee account number in
OCR at some other position.

Of particular significance, the unit record
automatically changes from a portion of a
billing document, to a nsgotiable document, to a payment posting
document, to a reversal document (if required) and to a record of


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Patent



payment. The system providec for the same document,
incorporating machine readable data which is printed on the
document at the time of billing, to serve as a negotiable
document, an accounts receivable posting document, a reversal
document (if required) and a record of payment.



While the foregoing represent the primary features and
advantages of the present invention, there also are various
secondary features and advantages as set forth below.



The negotiable instrument (unit record) effects a funds
transfer that can be used to credit the payment obligation of the
issuing party. In fact, the unit record becomes a negotiable,
personal check from the payer to the payee upon signing and
dating, even though it was initially part of the integrated
billing document from the payee.



The negotiable instrument i~ used to debit the payment
obligation of the issuing party if sufficient authorized funds
were not available at the time of presentment to the drawee
financial institution. Because of its unique properties, the
unit record enables the debit to be performed automatically using




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Patent



only that single document instead of two or more as with
conventional systems.



The method provides the ability to access and retrieve
the payer's accounts receivable account number from the customer
and financial institution's data base automatically through the
use of certain elements of machine readable data contained on the
unit record. For example, if the issuer chooses to provide the
payer with a unit record without the machine readable accounts
receivable account number, that number may be accessed and
retrieved for accounts receivable payment application by use of
the combination of the payer's financial institution's
transit/routing number and the payer's account number which
provides a unique key for positive retrieval.



More comprehensive payment alternatives are possible.
For example, an electronic print file capable of transmission to
th- paye-'~ bank and descriptive listing on the monthly checking
account statement can be provided.



Optional settlement by various payment methods
including, but not limited to, credit card, automated clearing

house (ACH), automated teller machine (ATM), manned teller


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~.Z88~64 Patent


workstation, point-of-purchase automated check-out stations, pre-
authorized draft and conventional billing practices are enabled.
The customer and financial institution control file subsystem as
described herein contains all the information required to make
payment by any option upon authorization by the payer.



The method makes possible a series of collection time
reporting and analysis systems which reflect the payer's relative
payment return behavior unique to each, such as, type of payment,
area of country, customer type, payment size, time of month/year,
services used, and depository financial institution. No similar
capability exists with conventional systems. Without the
complete information contained on and read from the unit record,
such data cannot be obtained.



The system is capable of enabling alternative
information formats to encourage usage of different payment
alternative~. For examplo, to encourage the use of the unit
record, complete with the amount, a series of marketing
incentives can be sequentially offered until the payer selects
one which causes him to use the unit record for payment. After
that, the incentive will remain the same as long as the preferred
payment alternative continues to be used.


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~.288~64 Patent


Microfilm image retrisval is allowed based upon the
capture sequence and the unique account number of the unit record
that is cross-referenced to the film image. For example, if an
issuer wishes to locate a specific payer's check film image for
the purpose of payment verification, the microfilm check image
can be retrieved by selecting a retrieval process which uses the
account number or the dollar amount or the payee's bank
transit/routing number. This capability cannot be accomplished
under conventional processes.



At the time of printing, the issuer can provide unique
account information on the face of the check unique to each of
their customers. For example, the unit record may be printed
with year-to-date interest paid, and, when the cancelled check is
returned to the customer, it provides proof of payment for
Internal Revenue Service purpo~es. This capability cannot be
accomplished by conventional methods. Alternatively, if an
electrical utility elects to show comparisons of usage of
electrical energy by the payer from period to period, this
information can be incorporated. Ultimately, important payer
information which must now be tracked by keeping the original
invoice, may be incorporated into the cancelled check file,


178/271
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enabling the payer to eliminate one piece of paper associated
with tracking periodic payments.



The present method adds security to the ultimate
payment of funds to a single account for deposit at the
depository bank for credit to the rightful payee, by printing the
payee name on the front and the payee endorsement on the back of
each unit record at the time of preparation. This approach uses
duplex printers, such as the Xerox 9700, which print on both
sides of the integrated billing document. Printing the
depository financial institution's endorsement on the back of
each unit record at the time of the unit record preparation,
including the depository financial institution's standard nine
digit routing number in OCR or BAR code, allows the drawee's
financial institution to expedite a non-paid unit record to the
depository bank through automated processes.



The single document moving through the traditional
check processing channels creates the information necessary to
update accounts receivable information of the issuing company.



Non-paid unit records automatically debit the prior
payment information using the original source document. For


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Patent
~ Z88~64

example, the MICR information illustrated on the unit record can
be read by the standard readers used in financial institutions.
Then the software program enables the automatic debit and return
of the non-paid unit record.



Non-paid unit records automatically create customer
notification of non-payment and notification to central credit
bureaus. For example, letters can automatically be prepared and
sent to the payer and collection agencies informing them of
delinquency and other credit information.



The method provides the ability to effect refunds,
rebates and over payments within the same billing stream through
the automatic issuance of a refund check drawn on the issuer's
depository account. Although such checks presently are printed
on MICR page printers, there exists no method whereby these
payments to customers could be printed automatically as part of
the remittance processing system.



The issuer can elect to provide various payment
alternatives according to a range of criteria, such as geographic
region of the country, customer characteristics, dollar amount of
invoice, payer's financial institution, or time of year (holiday



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1288~64 Patent


season for credit card option). For example, it may be more
advantageous to offer the payer the flexibility to automatically
chanqe the method of payment if the amount due is significantly
greater than the average amount due.



The issuer can communicate with individual segments of
their customer base via use of negotiable financial instruments
based upon such customer or transaction characteristics as drawee
bank, services used, level of service usage, geographic region of
the country, known household or corporate customer
characteristics, dollar amount of invoice or time of year. In
fact, this method enables information to be provided as a
permanent record on returned cancelled checks.



Variable fields in the machine readable portions of a
negotiable instrument can be used to provide access to databases
for purposes of displaying descriptive information on the payer~s
financial statement issued by his financial institution. For
example, the payer'~ account number can be used as the check
number so that the bank statement would group information for
unit records in a section of the statement that could also
identify the payee, i.e., utility companies, charge cards, etc.


1288164 178/271
Patent



This listing can allow enhanced bookkeeping for the payer to
track monthly expenditures for goods and services.



The present method incorporates an
ability to select and print unique data within the standard MICR
portion of the unit record to deliver information from the payee
to the payer that cannot now be delivered without using a
separate method. For example, it is possible with the present
invention to direct written information to a customer through the
normal check clearing procQss by using the payer's personal bank
account and routing numbers on a document satisfying acceptable
standard sizes for unit records by delivering the document
directly to a financial institution's lockbox, such that the
message will be delivered with the customer's cancelled checks.
This approach completely bypasses the postal system and would
save an amount egual to the difference between the postage rate
and the bank procQssing charge~.

Last but not least, the present concepts provide a
fully negotiable unit record that complies with all legal aspects
of the Uniform Commercial Code. In particular, the payer and the
drawee have all rights with respect to return for stop payment,



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~ 288164 Patent


return for uncollected funds, return for insufficient funds and
return for closed accounts.



While embodiments of th~ present invention have been
shown and described, various modifications may be made without
departing from the spirit and scope of the present invention, and
all such modifications and equivalents are intended to be
covered.




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Representative Drawing