Financial institution professionals are accustomed to some funny-looking machine type at the bottom of checks they receive (as well as issue). That type, called the MICR line, tells the Federal Reserve which financial institution it can debit for the item. But what happens when there is no MICR line? Chances are, it's a foreign check.

Foreign checks are cashed items that must be processed on a collection basis because they are drawn on financial institutions located outside the United States, and cannot be collected through the Federal Reserve System. Using Southwest Corporate's Foreign Check Collection service consolidates your credit union's item processing business with one provider.

Foreign check collection at Southwest Corporate is less expensive than the same service at a bank and Southwest Corporate awards the fastest foreign check credit available.

Members that submit foreign items need only state their collection preference when sending the item to Southwest Corporate:

• Provisional credit is the more popular of the two methods. Checks collected in this manner are processed in a cash letter submitted by Southwest Corporate. Even though collection of a foreign item may take weeks, Southwest Corporate members receive three-day availability on the check. Credit is based upon an estimated exchange rate, and may not be equal to the actual posted exchange rate on any given day.
• Foreign items sent to Southwest Corporate on a collection basis receive credit when the paying bank actually pays the check. In this method, the checks are sent directly to the bank for direct payment. This process normally takes six to eight weeks. The advantage to this method is that if the check is returned unpaid or there is a change in the exchange rate, there are fewer accounting adjustments to make on the part of the credit union.

For more information, contact Account Executive at 800.442.5763.