Locked in Featured

10:16am EDT October 31, 2002
For the business owner looking to increase efficiency and gain access to payments more quickly, a lockbox may be the answer.

Lockboxes are a unique post office box used for invoice payments. They are a means of accelerating the cash collection process by converting accounts receivable to cash.

When you go to the doctor, you expect to be billed. Upon receiving the bill, you send payment via mail to the office, where employees open the mail, take your check to the bank and reconcile the account. This can be extremely time consuming.

By using a lockbox, companies can outsource payment collection to a bank. The bank assumes the function of collecting your accounts receivable. Customers mail payments to a unique ZIP code and post office box instead of to your office. Your bank picks up remittances from the post office several times a day.

Items are sequenced and prepared for processing according to the business' specifications, including an audit of items to ensure negotiability of checks. A daily transmission file is posted to the business's accounts receivable system, and checks are deposited into its checking account.

After the money is deposited, remittance information and copies of checks are sent via courier or mail to the company.

Companies should consider a lockbox if they:

* Receive payments by mail

* Process payments at multiple locations

* Invoice for accounts receivable

* Want to improve funds availability

* Strive to avoid capital investments in nonrevenue producing assets

* Want to improve customer service

With a lockbox solution, your company benefits with an improved availability of funds due to accelerated collection. Additionally, outsourcing lockbox functions to a bank allows employees to focus on other business matters.

Most banks allow you to customize the method of processing your lockbox items.

Lockbox imaging is also available. With this service, business owners can make timely business decisions because images of checks, remittances and correspondence can be retrieved quickly and conveniently on a secure Internet site from a desktop computer. Images are available the same day and can be exported for archiving, research and customer service purposes. Check and remittance information can be downloaded from the bank's Internet site into accounting software programs, saving time when reconciling bank statements.

Online lockbox imaging is an ideal solution for companies that have time-sensitive issues and wish to post to receivables the same day, have a high volume of invoices paid by check and have a high average dollar amount per check. Companies that are required to furnish payment documentation to field services and have receivables that contain multiple explanations of benefits are also excellent candidates.

Business owners often think lockbox banking is only economical for large companies. But because automatic payment processing has become a standard in the banking industry, there are options for companies of all sizes. Your local bank can offer your business the right lockbox solution to fit your needs at a competitive price.

If your business is seeking to access money more quickly, reduce the amount of paper and save time for employees allowing them to focus on functions that generate more revenue, consider taking advantage of lockbox services to streamline your operations.

How to reach: Ryan Burgess is vice president and manager of Corporate Treasury Management and Public Funds for Fifth Third Bank, (614) 341.2583 or ryan.burgess@53.com.