Many credit unions are exploring their item processing optionslargely due to ongoing corporate CU turmoil and uncertainty.

After 40-plus years of serving more than 400 credit unions,we've discovered conversations with potential new customers allseem to have a common theme: Flexibility. If you'reconsidering outsourcing item processing, here are five questions toask would-be providers, and why:

1) SettlementOptions: Do you have the ability to settle anywhere? If not, find someone who can. Access to exchange networks is key.It's much less cost effective going solely through the FederalReserve and can have substantial implications on employee costs.The credit union will have to be much more involved in the returnsprocess and other processes that an outsourced solutionhandles.

2) Volume: Whatkind of volume do you handle and what kind of cost savings doesthat mean to me, regardless of my size?

3) Software: Whatplatforms do you support? Getting locked into an inferior softwareplatform can have substantial cost implications as a result ofinefficiencies on the teller line and possible balancingissues.

4) Price: Doesthe price you quote include all processing fees? Some processorscharge for image access, have minimum monthly fees/hidden monthlycharges and differ based on volume. When was the last time thecompany decreased prices based on operating efficiencies?

5) References:Can we speak to any of your current customers, not just a selectlist? It's what the one not on the list says, that you should payattention to.

Processing your member's share drafts and deposits should not becontingent on capital positions and settlement relationships.

Above all, item processing should be handled by a partner thatknows how to serve credit unions and has a well-documented trackrecord of finding the most efficient and cost-effectivesolutions.

EdCulpepper is CEO of PalmettoCooperative Services in Irmo, S.C.