Speeding up cash flow with a lockbox.
It's a service large companies have been using for decades. Now a growing number of small businesses are letting their banks help them improve cash flow with a lockbox. It works like this: Your customers mail their payments to a post office box, which your bank rents in your company's name. The bank sends a courier several times a day to clear out the box; checks are immediately deposited into your account, and you get a report outlining all the transactions in as much detail as you want and as frequently as you want.
Lockbox is a low-tech-sounding term for a high-tech, high-speed service that can be easily customized for just about any business, says Roger Shields, vice president and manager of treasury management at Bank One Utah in Salt Lake City. "Any company that is spending more than a few hours a day having someone in their office running to the post office, picking up the mail, making the deposits and keying that information back into the system is a good candidate for a lockbox," Shields says. "It's a volume-driven process, which is why the bank can do it much more efficiently and at much less cost than you can pay someone to do the same work in-house."
A company that averages 500 remittances a month can expect to pay $75 to $100 per month for lockbox service. Reporting procedures can range from something as simple as a faxed copy of the daily deposits to the image of each check being placed on CD-ROM. Shields says lockboxes are a standard banking service; to set up a program, call your bank.