Lock Box System Vs Concentration Banking

Each payment and any remittance info that has been received are set to process.

Lock box system vs concentration banking.

A financial institution that is the primary bank of an organization or the bank where the organization does most of its transactions. The lockbox system undertakes the following. Instead of handling incoming payments yourself and waiting for those payments to move through the mail payments go to a lockbox and the bank can collect those payments capture information about the transaction for your record keeping purposes and even put the money into your business account. In a lockbox system customers payments are physically collected close to them and much of the processing takes place close to the bank but in concentration banking both physical collection and processing take place close to the bank.

Lockbox banking is a service provided by banks to companies for the receipt of payment from customers. Under the service the payments made by customers are directed to a special post office box. Concentration banking involves using several banks to fund a large loan and lockbox systems deal with the. Lockbox processing also comes with some bells and whistles that can help you post payments faster and give you a long term archive of check and.

A banker is appointed by firm. Lockbox banking simplifies the accounts receivable process. Concentration banking usually requires that an organization keep all of its bank accounts with a single bank. The lockbox banking is the service offered by the commercial banks to the companies wherein the payment made by the customers is directed to the special post office box rather than to the company.

At its most basic functionality lockbox services simplify the accounts receivable process and get your checks into the bank faster. Once a bank receives a lockbox payment on behalf of a business a bank representative will collect the total sums of money dropped off on a daily or more frequent basis from the box. Under the lockbox banking system the company opens up a lockbox account with a bank which is generally at the central location easily accessible to the bank. Lockbox system and concentration banking are the techniques of collection of debt.

Several organizations use multiple banks. Lockbox system and concentration banking. Lockbox systems help businesses collect payments more efficiently.