Lockboxes were first developed in North America to accelerate cheque collection. Banks set up lockboxes in each of the major postal regions in the US to minimise the 'in-the-post' float time. The cheques were then read by the bank and the monies cleared and settled as fast as possible.
Although the basic operations of lockboxes have remained the same for many years, the only real change has been the addition of collecting card payments, where customer added their card number to the bill slip rather than enclosed a cheque. Although, there have been considerable improvements in the services over the last 20 years and the nature of the solutions has expanded enormously.
The advanced scanning of the cheque and remittance documents have improved the accuracy of keying and reconciling cheques and bills. The data captured from invoices and other remittance details are now much accurate and comprehensive. The introduction of remote deposit capture in the US has enabled lockbox users to import data and images captured from via third-party or OEM scanning software directly into the lockbox. This has speeded up the processing of these cheques considerably. Remote Deposit Capture services, using mobile phones to capture the cheque image and then transmit the image to the lockbox operator, are now cost-effective. Indeed lockbox services are no longer involve just payment processing, they have become holistic document management services.
In some lockbox services, staff in the client's accounts receivable department can view cheques and the remittance documents on-screen at their desks as they are processed by the bank or service provider.
There are types of lockbox services, retail lockbox: which are simple high volume services and B2B lockbox which are able to cover much more complex bills and often multi-currency payments. Key differentiators between the lockbox services are: the number of countries where cheques can be locally, I.e. Where a local PO Box address is available; whether the payment is processed on the day of receipt and when the payment enters the local clearing. Bank lockbox services are typically integrated with their EB and other payment services.
Retail Lockbox Services
Retail lockbox services are typically used by large scale retailers and utility companies who send a repayment form and envelop to send the repayment form plus the cheque or details of the payment card to be debited.
Retailer lockbox services typically include providing file containing full details and images of the repayment forms for payments received. Additional services provided also include processing retailer gift vouchers/coupons, and scanning both sides of the repayment for any additional information or messages from the customer.
B2B Lockbox Services
The B2B lockbox services cater for the more complex bill collection, e.g. where there are three invoices covered by one cheque, payments also include promissory notes and bills of exchange, and multiple documents received/payment.
The delivery of the key data from the remittance documents is often tailored to meet the company's specific needs and file formats to enable direct input to the customer's ERP accounting systems, and can also include extra information, such as credit or debit notes and part paid invoices.
Multi-currency lockboxes are available, typically for a region such as Europe. Companies are able to give their customers an in-country address to send their remittances to, so eliminating cross-border postal float. The cheques and payment card details are processed and accompanying documents scanned each day. They are then cleared locally or centrally for the region and the funds credited to an account within the bank. Some services offer the facility to have the funds cleared and credited, with some delay, to account(s) in another bank.