Through lock-box services, banks provide payment collection boxes at different locations help its client receiving payment from different vendors. The boxes are operated by the banks and banks clear the lock boxes multiple times in a day to collect all the incoming cheques and payments on behalf of its clients, mainly companies and businesses. After receiving the cheques, the banks deposit the amount in the respective customer’s accounts.
Advantages of lock-box services
It helps to simplify payment collection and processing of account receivables on behalf of different companies.
It reduces overhead work for the company as the company persons do not need to collect the cheques and deposit the same in the bank.
Only the drop box addresses are provided to the vendors which enable them to send their all cheques to the same address through post.
Company maintains lock boxes in different locations across a country with the help of a bank to facilitate payment receipts from all of its customers and vendors.
As the bank itself receives the cheques it reduces time significantly and makes the payment collection process faster.