What is a Lockbox?
Published on: Sat, Dec 5, 2009
Classified as: Banks
Lockbox service is one of the banking services that businesses of all sizes may find useful. Essentially, a lockbox is just a simple post office box that your bank establishes for your business and that is controlled by the bank. You are issued a remit to address by which your customers will be allowed to send payment for all invoices issued by your organization directly to the lockbox. In turn, all correspondence will be opened by your bank, it will deposit the checks into your accounts, and provide you with electronic access by which you will be allowed to see daily activity.
Advantages of Lockbox
Security
To securing a lockbox for your business there are several advantages. One of the most important advantage is security. Generally, lockboxes are protected above and beyond the usual security measures that are associated with having a post office box. When a payment reaches your lockbox then the chances of it falling into the wrong hands is zero.
Posting payments into your accounting system becomes easy
Second advantage is that it become much easier for you to post payments into your accounting system using the lockbox procedure. About the deposited payments many banks are able to provide detail that includes images of the checks and any other documents that come with the check. By this method your accounting team is prevented from having to open mail and sort out the checks before entering the data.
However, depending on the type of accounting software you use you may be able to save even more time. Many banks are able to provide a delimited report that can be imported directly into some accounting software systems.
You may have backup history of your Receivables
A third advantage that you may have due to the lockbox system is that you have a backup history of your Receivables. If something major happen with your software accounting system and you lose a portion or all of the data, then history reports on lockbox activity can help you begin the process of rebuilding.
While a lockbox is not able to perform any function that your accounting team could not do for you, the advantages of time saved, backup information source and enhanced security make a lockbox system a very attractive option. So check with your bank today and see what they are offering in the way of a lockbox program.
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