This type of lockbox is a collection system that will allow a company to process payments from their customers quickly. These are generally a post office lockbox that customers send their payments to. A bank employee will collect these payments and then deposit them into the account of the company the payments are for and then send a report to that company.
With this system there are pros and cons.
• It helps speed up the payment processing time because instead of the payments sitting in the office on a desk waiting for the employee to match the payment with the right bill and then putting it into the computer. Then the payment would have to be taken to the bank to be put into the company’s account or cashed. With a lockbox collection system the payments will go directly to the bank. When the employee gets the report from the bank they will post the payment to the bill then. The money is already in the company’s account so you get the money faster.
• Your company can have lockbox collection systems in different parts of the country near the company’s branch offices or companies. The customer then can send their payment to the nearest lockbox, which will shorten the time it takes to mail in a payment and speeds up the payment.
• The lockboxes are generally paid on a per-payment basis so if you are a small company and just receive a small volume of payments it may cost more than your company is saving. Generally they work best for a company that receive larger amount of payments.
• These lockboxes are secure as the employee that is in charge of collecting the payments. If the employee is dishonest and does not post all the money to the company’s account the company can lose money. Sometimes the employee is just a clerical employee and could be susceptible to bribery.
• The company will have to spend time training their employees on the new system and how to post the payments.
There are some banks that in order to gain your business will be willing to negotiate the price for using a lockbox service. One important thing that you need to do before utilizing a bank’s service for using a lockbox collection system is to investigate the security precautions the bank has for guarding against fraud and theft. Before choosing to use the lockbox collection system you should estimate how much money you will gain from earlier deposits after deducting the cost of the lockbox collection system and see if it is worth it the added expense. The company will also have the added expense of notifying customers of new address for payments.