Understanding Lockbox Services
Lockbox Services are available for commercial applications in a variety of settings. Banks, property owners, businesses with limited hours and utility companies are just a few types of businesses that use lockbox methods to accept payments. Regardless of who is using a lockbox, the basic principal remains the same—providing clients a secure way to make payments or deposit funds.
Finding a definition for these services, may hinge on who you ask and their age. The approach you take to finding a service may also affect the products you find. Asking a bank teller about lockbox products might produce totally different results than doing an online search. Read on for two different products that share the same name.
What are lockbox services?
Banks provide lockbox sites, or night deposit drawers, to customers that want a secure way to deposit daily receipts after hours. Typically, clients are provided with a key to the lockbox. Most facilities position the night-drop in or near the drive through lanes. Customers put all of their checks and cash into a lockable bank bag with a deposit. The bag is then dropped into the lockbox. A bank employee will verify the deposit on the next banking day and complete the transaction. Some banks hold the locked deposit bag until the customer comes in and the bag is opened in the customer’s presence. The main objective is to secure the funds overnight. Many people over the age of 50 think of this deposit method first if asked about lockbox facilities.
Today, the term “lockbox services” more commonly applies to another method of payment collection.. A lockbox is essentially a mailbox. Businesses contract with a lockbox service to collect payments. The business instructions clients, customers or tenants to mail payments to a designated post office box address. An outside company collects the payments everyday and processes them electronically. A paper check or electronic transfer is deposited into the main account daily for the business. This process allows business owners and employees to focus on retail or administrative duties instead of spending countless hours processing payments.
Sometimes businesses that accept online payments are not fully automated. In this case, when an online payment is processed, a lockbox service may be employed to process a paper check for each online transaction. These printed checks are mailed to the company and processed like any other check they receive. It makes the transaction easier for the customer.
What are the advantages of using a service to collect payments?
Lockbox services maintain accurate records and only have one job—to process payments. Generally, these services are provided by banks. They charge fees for their service, but with a large volume of checks and other payments, the fees are worth the expense because it reduces man-hours and labor costs associated with processing payments. These services are sometimes referred to as Remittance Processing. Utility companies and condominium associations use these services frequently. Next time you make an online payment, you may be using a service provider to get the payment to your creditor.