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 instead of going to the company. The bank goes to the box, retrieves the payments, processes them and deposits the funds directly into the company's bank account.
As with most payment processing services, there are both pros and cons to lockbox banking. Lockbox banking provides companies with a very efficient way of depositing customer payments. This is especially beneficial if a company is unable to deposit checks on a timely basis or if it is constantly receiving customer payments through the mail.
On the other hand, lockbox banking can also be very risky. Bank employees who have access to lockboxes are rarely supervised, which opens the situation up here to possible fraud. The fraud primarily occurs in the form of check counterfeiting, because the checks that are in get more info the lockboxes provide all the information needed to make counterfeit checks. A company can protect website itself from such fraud by using a bank that it trusts and by constantly monitoring its lockbox.
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In banking, a lock box is a service offered by commercial banks to organizations that simplifies collection and processing of account receivables by having those organizations' customers' payments mailed directly to a location accessible by the bank.