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Lockbox

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Lockbox
A service offered by banks to companies in which the company receives payments by mail to a post office Box and the bank picks up the payments several times a day, deposits them into the company's account, and notifies the company of the Deposit.
    
Lock Box banking is a service offered by commercial banks that simplifies collection and processing of account receivables by having payments mailed directly to a location accessible by the bank. This enables the company to put the money to work as soon as it's received, but the amounts must be large in order for the value obtained to exceed the cost of the service.
    
In general, a lockbox is P.O. Box that is accessible by the bank. A company may set up a lock Box service with their bank for receiving customers payments. The company's customers send their payments to the P.O. Box. Then the bank collects and processes these payments directly depositing them to the company's account.
    
A post office Box (often abbreviated P.O. Box or PO Box) is a uniquely-addressable lockable Box located on the premises of a post office station.
    
This enables the company to put the money to work as soon as it's received, but the amounts must be large in order for the value obtained to exceed the cost of the service. Under the service, the payments made by customers are directed to a special post office Box, rather than going to the company. The bank Will then go to the Box, retrieve the payments, process them and Deposit the funds directly into the company bank account.
    
The  benefit is that lockbox banking provides companies with a very efficient way of depositing customer payments. This is especially beneficial if a company is unable to Deposit checks on a timely Basis and/or if it is constantly receiving customer payments through the mail.
    
On the other hand, lockbox banking can also be very risky. Bank employees who have access to lockboxes are rarely supervised, which opens the situation up to possible fraud. The fraud primarily occurs in the form of check counterfeiting because the checks that are in the lockboxes provide all the information needed to make Counterfeit checks. Companies can protect themselves from such fraud by using a bank that they Trust and by constantly monitoring their lockboxes.
Posted by  Privatebanking.com
 
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