Lock Box System Vs Concentration Banking

At its most basic functionality lockbox services simplify the accounts receivable process and get your checks into the bank faster.

Lock box system vs concentration banking.

A financial institution that is the primary bank of an organization or the bank where the organization does most of its transactions. 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. 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. A banker is appointed by firm.

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 systems help businesses collect payments more efficiently. Once a bank receives a lockbox payment on behalf of a business a bank representative will collect the total sums of money dropped off on a daily or more frequent basis from the box. Each payment and any remittance info that has been received are set to process.

Lockbox system and concentration banking are the techniques of collection of debt. Lockbox banking simplifies the accounts receivable process. 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.

Under the service the payments made by customers are directed to a special post office box. 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. The lockbox system undertakes the following. 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 lockbox system is a technique of collection of debt where local post office boxes maintained by bank of firm are collected. Concentration banking involves using several banks to fund a large loan and lockbox systems deal with the.