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RESTRUCTURING AND INTEGRATION EXPENSE
 12 Months Ended
Dec. 31, 2019
Restructuring and Related Activities [Abstract]  
RESTRUCTURING AND INTEGRATION EXPENSE
Restructuring and integration expense consists of costs related to the consolidation and migration of certain applications and processes, including our financial, sales and human resources management systems. It also includes costs related to the integration of acquired businesses into our systems and processes. These costs primarily consist of information technology consulting and project management services and internal labor, as well as other miscellaneous costs associated with our initiatives, such as training, travel and relocation. In addition, we recorded employee severance costs related to these initiatives, as well as our ongoing cost reduction initiatives, across functional areas. Our restructuring and integration activities increased in 2019, as we are currently pursuing several initiatives designed to focus our business behind our growth strategy and to increase our efficiency.

Restructuring and integration expense is reflected on the consolidated statements of (loss) income as follows for the years ended December 31:
(in thousands)
 
2019
 
2018
 
2017
Total cost of revenue
 
$
3,562

 
$
1,466

 
$
568

Operating expenses
 
71,248

 
19,737

 
8,562

Restructuring and integration expense
 
$
74,810

 
$
21,203

 
$
9,130


The following presents restructuring and integration expense by segment. Corporate expenses are allocated to the segments based on the allocation methodology described in Note 19.
(in thousands)
 
Small Business Services
 
Financial Services
 
Direct Checks
 
Consolidated
2019
 
$
49,634

 
$
20,879

 
$
4,297

 
$
74,810

2018
 
10,837

 
10,087

 
279

 
21,203

2017
 
4,775

 
3,950

 
405

 
9,130


Restructuring and integration expense was comprised of the following for the years ended December 31:
(in thousands)
 
2019
 
2018
 
2017
External consulting fees
 
$
45,638

 
$
8,509

 
$
516

Internal labor
 
12,115

 
4,654

 
1,127

Employee severance benefits
 
10,865

 
5,774

 
7,176

Other
 
6,192

 
2,266

 
311

Restructuring and integration expense
 
$
74,810

 
$
21,203

 
$
9,130


Our restructuring and integration accruals represent expected cash payments required to satisfy the remaining severance obligations to those employees already terminated and those expected to be terminated under our various initiatives. Restructuring and integration accruals of $3,459 as of December 31, 2019 are included in accrued liabilities on the consolidated balance sheet. Restructuring and integration accruals of $3,461 as of December 31, 2018 are reflected on the consolidated balance sheet as accrued liabilities of $3,320 and other non-current liabilities of $141. The majority of the employee reductions are expected to be completed in the first quarter of 2020, and we expect most of the related severance payments to be paid by the third quarter of 2020, utilizing cash from operations.

Changes in our restructuring and integration accruals were as follows:
(in thousands)
 
Employee severance benefits
 
Operating lease obligations
 
Total
Balance, December 31, 2016
 
$
4,181

 
$
—

 
$
4,181

Charges
 
7,843

 
23

 
7,866

Reversals
 
(667
)
 
—

 
(667
)
Payments
 
(6,981
)
 
(19
)
 
(7,000
)
Balance, December 31, 2017
 
4,376

 
4

 
4,380

Charges
 
7,672

 
597

 
8,269

Reversals
 
(1,898
)
 
(71
)
 
(1,969
)
Payments
 
(6,971
)
 
(248
)
 
(7,219
)
Balance, December 31, 2018
 
3,179

 
282

 
3,461

Charges
 
11,516

 
—

 
11,516

Reversals
 
(651
)
 
—

 
(651
)
Payments
 
(10,585
)
 
—

 
(10,585
)
Adoption of ASU No. 2016-02(1)
 
—

 
(282
)
 
(282
)
Balance, December 31, 2019
 
$
3,459

 
$
—

 
$
3,459



(1) Upon adoption of ASU No. 2016-02, Leasing, and related amendments on January 1, 2019 (Note 2), our operating lease obligation accrual was reversed and the related operating lease asset was analyzed for impairment in accordance with the new guidance.

The charges and reversals presented in the rollforward of our restructuring and integration accruals do not include items charged directly to expense as incurred, as those items are not reflected in accrued liabilities on the consolidated balance sheets.