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Raise your black veils and trample your flowers; we’re not attending the funeral of the paper check, and thus the lockbox, just yet. Business owners, shine up your keys.
Yes, the paper check has seen a slow—and steady—decline, but 27.8 billion checks were written in 2009. Paid checks in the same year represented a value of $31.6 trillion and accounted for 22% of all non-cash payments made (The 2010 Federal Reserve Payments Study). Perhaps most tellingly, 52% of consumers still pay at least one bill via check, making it the most common method of bill payment (FIS Research Brief, July 2012).
The ritual of check writing is firmly entrenched at the grocery store, for shopping, dining out, entertainment, and paying contractors and household help (FIS). The semi-mythical “paperless society” we’ve been breathlessly anticipating ever since the rise of online banking and bill pay has not yet arrived. At least for the foreseeable future, the paper check is here to stay, and so, too, is the lockbox.
Steady cash flow – the proverbial thorn in every business owner’s side. The answer to your woes is simple: the lockbox, a company mailbox maintained and operated by your bank or a third-party service provider. Lockboxes can be established in multiple locations convenient to your highest sources of cash flow to hasten the collection process.
Customers mail their payments to your lockbox address where bank personnel open the mail and deposit the checks into your account. They use image capture technology to make electronic copies – front and back—of coupons, checks, invoices, and envelopes and send you a daily report. This data is also available to your employees through a secure online portal and may include images, reports, and exception transactions associated with each payment.
Most banks’ lockbox services can be tailored to your organization’s needs and are generally divided into three categories:
Because of the associated processing fees, the lockbox is not cost-effective for every organization. It usually works best for businesses that process a large volume of payments, such as utility companies, property management companies, municipal authorities, manufacturing companies, medical billing companies, etc. However, because increased automation has significantly reduced the cost of payment processing, banks can be more flexible, customizing their services to fit ever smaller businesses with lower payment volume.
The lockbox is a highly effective cash flow tool and data management system that can enhance your efficiency and productivity and, ultimately, save you money. To learn more about how it may work for your business, contact your Cash Management Representative for an evaluation of your requirements and customized pricing options – the lockbox may hold the key to your success.