A lockbox service allows businesses to receive payments directly to a safe deposit box established by their bank, which opens and deposits the checks into their accounts. Benefits include increased security, easier payment registration, and a backup history of credits.
One of the banking services that businesses of all sizes may find useful is a lockbox service. In essence, a safe deposit box is simply a post office box that your bank establishes for your business and that the bank will check. You are issued a mandate to an address that will allow your customers to send payment for all invoices issued by your organization directly to the safety deposit box. In turn, your bank will open all correspondence, deposit checks into your accounts and provide you with electronic access allowing you to see day-to-day activity. In short, your bank becomes the means by which you collect receivables and deposit them into your operating account, payroll, or other designated corporate account.
There are several benefits to securing a safety deposit box for your business. One of the most important is security. In general, safe deposit boxes are protected beyond the normal security measures associated with having a post office box. When a payment reaches your safety deposit box, the chances of it falling into the wrong hands are slim. This can give you and your customer base a sense of comfort.
Secondly, the lockbox procedure can make it much easier to register payments in the accounting system. Many banks are able to provide details of deposited payments which include pictures of the checks and any other documents that came with the check. It is often possible to download a daily batch of receipts in PDF format and use it for manual entry into the system. This method saves your accounting team from opening mail and sorting checks before entering data. It also eliminates the need to prepare a bank deposit.
However, you could save even more time, depending on the type of accounting software you use. Many banks may provide a delimited report that can be imported directly into some accounting software systems. If you’re lucky enough to have compatible software, the task of registering payments may take a few moments, even if your payment list runs into the hundreds.
A third advantage of the lockbox system is that you have a backup history of your credits. If something serious should happen with your software accounting system and you lose some or all of your data, lockbox activity history reports can help you begin the rebuilding process. This means you can quickly update your customer accounts and start rebuilding your income and expense reports month-by-month.
While a lockbox doesn’t perform any function that your accounting team couldn’t do for you, the benefits of saved time, backup source of information, and increased security make a lockbox system a very attractive option. Check with your bank today and see what they have to offer in terms of a lockbox program.
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