Lock Box System Vs Concentration Banking

Lockbox systems help businesses collect payments more efficiently.

Lock box system vs concentration banking.

Each payment and any remittance info that has been received are set to process. In other words a firm has its operations in several parts of the country and in order to ease the complexity of handling multiple bank accounts at different locations the firm may opt for a concentration banking service whereby all the funds from different regional banks gets forwarded to a single bank account called as a concentration account. A banker is appointed by firm. Lockbox banking simplifies the accounts receivable process.

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. 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. Several organizations use multiple banks.

A lockbox system is a technique of collection of debt where local post office boxes maintained by bank of firm are collected. 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. Lockbox system and concentration banking are the techniques of collection of debt.

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. Under the service the payments made by customers are directed to a special post office box. Lockbox system and concentration banking. 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.

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. Concentration banking usually requires that an organization keep all of its bank accounts with a single bank. Lockbox banking is a service provided by banks to companies for the receipt of payment from customers.