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One of the banking services that businesses of all sizes may find useful is a lockbox service. Essentially, a lockbox is simply a post office box that your bank establishes for your business and that the bank will control. You are issued a remit to address that will allow your customers to send payment for all invoices issued by your organization directly to the lockbox. In turn, your bank will open all correspondence, deposit the checks into your accounts, and provide you with electronic access that allows you to see daily activity. In short, your bank becomes the means whereby you collect receivables and deposit them into your operating, payroll or other designated business account.
There are several advantages to securing a lockbox for your business. One of the most important is security. Generally, lockboxes are protected above and beyond the usual security measures associated with having a post office box. When a payment reaches your lockbox the chances of it falling into the wrong hands is just about nil. This can give both you and your customer base a sense of comfort.
Second, the lockbox procedure can make it much easier for you to post payments into your accounting system. Many banks are able to provide detail about the deposited payments that includes images of the checks and any other documents that come with the check. Often, a daily batch of receipts can be downloaded as a PDF and used for manual entry into your system. This method saves your accounting team from having to open mail and sort out the checks before entering the data. Also, it eliminates having to prepare a bank deposit.
However, you may be able to save even more time, depending on the type of accounting software you use. Many banks can provide a delimited report that can be imported directly into some accounting software systems. If you are fortunate enough to have compatible software, then the task of posting payments may take a few moments, even if the list of payments reaches into the hundreds.
A third advantage to the lockbox system is that you have a backup history of your Receivables. Should something major happen with your software accounting system and you lose a portion or all of the data, history reports on lockbox activity can help you begin the process of rebuilding. This means you can bring your customer accounts up to date quickly, as well as begin to reconstruct your Income and Expense reporting month by month.
While a lockbox does not perform any function that your accounting team could not do for you, the advantages of time saved, backup information source and enhanced security make a lockbox system a very attractive option. Check with your bank today and see what they have to offer in the way of a lockbox program.
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