Using a lockbox service shortens the amount of time necessary to process your customers’ payments. Offered by banks, this service gets your money into your account quickly and efficiently. It frees you from the tasks of mail collection, processing, and depositing customers’ payments. It’s ideally suited to small businesses that typically receive payments by mail and want their money in the bank as soon as possible.
It works like this.
Mailed payments from customers are received at a single, specially designated post office box and then delivered to the bank directly for processing. Your bank’s personnel opens the payment and extracts all of the remittance advice data and amount details and collates all of this information into a file that is sent to you the same day. In some cases the information can be imported directly into your accounts receivable system. Since the check goes directly from lockbox to bank, payments are received and deposited all within the same day. Doing this work yourself can delay the deposit of the payments depending on how long it takes you to process your customers’ payments for deposit, and then to actually make the deposit at the bank. Today’s increased automation in payment processing has allowed banks to reduce the cost of their lockbox banking services enough to make it economical for businesses of a smaller size. Since most banks will customize their lockbox banking services and costs to fit your specific needs, you should contact your bank for more information.