Income verification documents are an essential part of any onboarding process, whether it’s for a bank or auto lender. Proof of income establishes the origins of the particular funds being invested or deposited. In the case of lending, it proves that the borrower has sufficient income to pay back the loan.
Proof of income can be required for the purpose of Enhanced Due Diligence. For example, a customer that is trying to deposit or take out a loan for a significant sum will usually be required to show proof of income.
When carried out properly and with the right technology, income verification should not take too much time and effort.
Income Verification Document Collection
Normally, when asking for the proof of income documents, the organization clarifies essential details and provides users with a comprehensive copy of the materials they need to submit.
In this case, a simple proof of income letter is enough, which determines and confirms a person’s income and employment status. This letter should clearly state one’s basic income information, including workweek hours, annual income or wage per hour, and how one expects to maintain or enhance it in the future.
Additionally, a person might need to provide supporting documents as proof.
Typical proof of income documents are:
- Pay stub
- Bank statement
- Federal Tax return for the previous year
- Wages and tax statement
However, these documents may vary, considering the type of employment and place of work of the applicant.
Standard documents for PAYE (Pay As You Earn) employees include:
- Copies of all payslips from the previous 2 (or more) calendar months or from the previous 8 (or more) weeks, depending on whether the applicant has been paying weekly or monthly.
- Total income for the last tax year form that varies according to the applicant’s location.
In case if the applicant is a pensioner or has other sources of income, they might need to provide the following statements:
- Annual pension;
- Trust fund income;
- Maintenance payments;
- Regular state benefits (Social Security, unemployment, etc).
For self-employed individuals:
- Self Employed Wage and Tax Statements
- Bank Statements.
However, each applicant should be considered on a case-by-case basis. Sometimes, it might be a reasonable decision to opt for professional proof of income services.
How Digital Document Collection Works
As we’ve seen, high-stakes financial transactions usually benefit from income verification documents. But how can documents be collected digitally and efficiently? Document collection begins with having the right customer-facing platform in place.
With Lightico’s Digital Completion Cloud, it’s easy for agents to collect income verification documents. The agent simply sends a text message containing a link to a virtual session. The customer snaps photos of their documents using their smartphone camera. Meanwhile, an algorithm scans the documents for authenticity as part of the document verification process. During this stage, many variables are automatically weighed to confirm authenticity, including:
- Face and orientation detection
- Edge detection and cropping
- Front to back data correlation
- Cross checks on thousands of global IDs
- Colorspace analysis
- Headshot integrity
- Selfie to ID photo match
- Selfie liveness detection
As a result, the documents are verified for authenticity. The agent can immediately start reviewing the income verification documents to ensure the customer’s solid financial standing.
Income Verification Documents Are Easy to Collect
With digital document uptake, it’s easy for financial institutions to establish the authenticity of income verification documents. Companies see a number of benefits, including reduced turnaround time, fewer touchpoints, and greater customer and employee satisfaction.
Document verification and collection is just one capability in the larger automated workflow, which includes ID verification, eSignatures, eForms, digital payments and much more. To learn more, visit Lightico.com.