The term lockbox account refers to a service offered by commercial banks that allows for the efficient collection of money from customers. The lockbox process starts with payments mailed by customers to a post office box owned by the company. The bank collects payments from the post office box and deposits the money directly into the company's account.
Also known as remittance processing, a lockbox simplifies the collection and processing of checks received from customers. They are frequently used by companies operating in multiple locations, and are popular in urban areas. Lockbox accounts allow companies to process payments within 24 hours, thereby accelerating cash collection.
The end-to-end process consists of the following steps:
Financial institutions have the capability to process large volumes of payments. High speed machines can open mail, separate checks from coupons, scan images, and use optical character recognition to process tens of thousands of payments per hour.
The transaction costs for lockbox services can range from as much as $1.00 per remittance processed to less than ten cents.