ePayments Helps School Lunch Programs Recover from Bad Debt

Each year, millions of dollars worth of bad checks are written to school lunch programs, leaving thousands of already cash-strapped schools scrambling to make up the shortfall.

"We’ve actually heard stories of school principals having to come up with the money out of their own pockets," said ePayments Corp. CEO Paul Lufkin, whose company’s Educational Financial Services division helps school nutrition and lunch programs reclaim bad debt. "The schools — by law — are not allowed to write off bad debt or get reimbursed by the district."

With that in mind, Lufkin’s company has devised a program that guarantees collection of the full value of current-school-year bad checks and handles everything from processing and collection to fielding calls from parents whose checks haven’t cleared. There is no cost to the school district and ePayments benefits by recovering non-sufficient funds (NSF) fees on the bad checks it recovers.

The new program — powered by ePayments’ iSmart Check Processing System for intelligent and integrated check acceptance — has already helped numerous school districts around the nation solve their bad check problems. For the Limestone County School District Child Nutrition Program near Huntsville, Ala., for example, signing on with ePayments meant not having to come up with money at the end of each year to cover school lunch program losses. For others, it has meant not having to take money from organizations such as the PTA just to cover bad debt from school lunches.

"We are excited to have the ability to offer this service to schools, and it’s rewarding to help these schools address their budgetary problems," said Lufkin. "School lunch program directors now have a cost-neutral solution that saves them time, gets them out of the debt collection business and allows them to focus on their core function of overseeing child nutrition."

Lufkin said the response to his educational financial services division has been great, and he will continue to grow the business organically and through acquisitions.

ePayments specializes in working with schools, non profits, governments and companies of all sizes that handle payments in the form of check and credit card transactions. Since U.S. banking system rules were changed to allow businesses to use the Automated Clearing House network (ACH) and Check 21 methodologies to electronically process checks from customers, a new industry of providers has emerged to support businesses with electronic check conversion, electronic NSF collection and related compliance services.