Lock Box System Vs Concentration Banking

A lockbox system is a technique of collection of debt where local post office boxes maintained by bank of firm are collected.

Lock box system vs concentration banking.

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. Lockbox banking simplifies the accounts receivable process. Concentration banking usually requires that an organization keep all of its bank accounts with a single bank. The lockbox system undertakes the following.

A financial institution that is the primary bank of an organization or the bank where the organization does most of its transactions. Under the service the payments made by customers are directed to a special post office box. Lockbox system and concentration banking are the techniques of collection of debt. 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.

Lockbox system and concentration banking. Lockbox banking is a service provided by banks to companies for the receipt of payment from customers. 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. 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.

At its most basic functionality lockbox services simplify the accounts receivable process and get your checks into the bank faster. Concentration banking is the practice of shifting the funds in a set of bank accounts into an investment account from which the funds can be more efficiently invested. 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. Several organizations use multiple banks.

A banker is appointed by firm. Lockbox systems help businesses collect payments more efficiently. Concentration banking involves using several banks to fund a large loan and lockbox systems deal with the.