Inhouse Check Printing

Governments paying tax refunds and making payments for services often need to have check printing outsourced. But technology is now available to print checks - including computer-read characters - saving time and money.

by / June 30, 1995
July 1995

Level of govt.: County

Function: Funds disbursement

Problem: Paying vendors and rebates required county to outsource check printing.

Solution: Secure check printers.

Jurisdiction: Palm Beach County, Fla.

Vendors: Xerox, Bottomline Technologies Inc.

Contact: Denise Smyth, Dir. Automation, Clerk of the Circuit Court, Box 229, West Palm Beach, FL 33402

PALM BEACH COUNTY, Fla. - Staff at the Palm Beach County, Fla., Circuit Court clerk's office was bogged down in production and accounting check disbursements early last year due to growing volume and outdated manual processes. The situation sparked an effort to identify not only a solution for the immediate problem, but also a long-term strategy for check payments - which had grown to some 400 drafts per day. Relief was eventually found in the form of new hardware and software products capable of printing and managing magnetic ink character recognition (MICR) encoded documents.

The Palm Beach Circuit Court installed the first of these new systems in March 1994 to handle general accounts payable. Consisting of a Xerox 4197 desktop MICR laser printer combined with Exeter, N.H.-based Bottomline Technologies Inc.'s custom account management and check writing software, the new system was immediately successful at replacing manual check production and accounting procedures with semi-automated procedures.

A second system was installed in April 1994 for juvenile restitution payments, and a third is planned to be up and running early this year. These new distributed check production systems completely eliminate the need for manual accounting, processing and preprinting of checks.

The major benefit, according to Denise Smyth, director of automated services for the Palm Beach Circuit Court clerk's office, is that the new system is much more flexible than what was used before. Prior to the first installation, her office was considering changing banks - a costly move given the large numbers of pre-printed checks that would need to be destroyed and reprinted. Under the new system, blank check stock is generic, and account information for a new bank can be updated within minutes without affecting the check-printing process.


Laser printing has been around for some time, but applying this technology to check production is a recent development. Current laser-based MICR printers provide improvements in registration accuracy and readability of the MICR line. At 300 dots per inch, MICR desktop laser printers can easily print the E13B MICR line so that it meets both the American Banking Association and American National Standards Institute's specifications.

The MICR desktop laser printers, combined with off-the-shelf or custom-designed software, form a complete system that can simplify the entire document creation and fund management process while maintaining or improving on existing security requirements.

MICR laser printers use a ferromagnetic dry ink instead of normal toner. While the initial cost of MICR toner is slightly higher than regular laser toner, average yield per pound is comparable. This is more than offset by the lower material costs for check stock, which is typically cut in half.

The traditional approach to check printing employs a multiple-step process that ultimately results in the use of an impact printer to create checks from preprinted paper stock. This method requires handling by a large number of people as well as a complicated scheme for maintaining security of the negotiable forms.

The use of MICR desktop laser printers also significantly lowers check rejection rates as they are sent through reader/sorter equipment at banks. Usually less than 1 percent of MICR produced checks are rejected, compared with about 5 percent for checks produced using traditional methods.


Traditional methods for printing checks require many steps. First, fixed graphic elements must be designed and printed. Then any text or logos, customized for each account, are added. An additional process is required to print the MICR line code, using magnetic ink, at the bottom of the check.

From the moment the checks are MICR-encoded, security becomes paramount because the documents are then negotiable. The rest of the process typically requires bonded delivery for transport and high-security warehousing - at considerable cost given the large quantities typically produced to achieve economies of scale.

Before the preprinted checks can be used, they must be transferred from secure storage employing proper audit controls to record the serial numbers. Next, variable data such as date, amount, and other information is printed on the checks using an impact printer. Finally, the checks are bursted, de-collated, trimmed, and signed.

This process presents many opportunities for errors, fraud, and damage. Misprinted or damaged checks must be recorded, voided and destroyed before they can be reissued. In addition to its complexity, this process moves slowly and each step adds cost.


The laser-based MICR printers affect overhead costs in two ways. For starters, they eliminate the need to produce and store large quantities of preprinted checks. Users need only stock blank non-negotiable security paper - which can be used to print checks from any of the jurisdiction's accounts.

In addition to flexibility, the new system simplifies control, auditing and security. Control and auditing are now semiautomated because the printer and software records and tracks all transactions.

The new printing technology features a remarkably durable MICR toner, which is fused to the paper, creating an indelible image that will not crack, peel, or scratch off even when the documents are folded or damaged through rough handling.

Security is also much easier to manage because there are fewer steps - hence, fewer opportunities for fraud. Multiple levels of security passwords are provided by the printer and software, making it difficult for anyone except authorized personnel to use it. In addition, the signature and font cartridges are separate components that can easily be locked away.

Most MICR laser printers have security features, providing additional security. To prevent check theft, an auditor can be required to be present during printing. The ability to use host system passwords on multiple levels provides an extra level of security. Some manufacturers offer systems that also keep a record of pages processed, providing a simple audit trail.

According to Smyth, the new systems also save time and money. The number of production steps needed to produce and record a check is significantly reduced. Smyth estimates that the time required to process checks has been cut in half. In addition, blank security stock is less expensive than preprinted checks.


Technology advances in MICR desktop laser printing have yielded compact, stand-alone systems ideally suited for distributed check printing. These systems are quickly gaining a foothold in many government agencies because of their impacts on productivity and the high degree of security and control that they can provide. Applications include accounts payable, court-controlled child support, trust fund disbursements, juror payments and employee payrolls. These functions can be efficiently streamlined, representing a significant improvement over traditional methods of check production, much to the relief of those awaiting government reimbursement.