How a lockbox works
Customers send checks and payment documents to a designated mailing address. The provider collects mail, captures check and remittance data, processes deposits, and sends reports or files to the business.
Retail services commonly handle many consumer payments. Wholesale services may capture more complex business remittance details. Provider capabilities differ.
Deposit is not invoice reconciliation
A bank deposit does not necessarily show which invoices were paid.
Hypothetical example: A $2,000 check covers three invoices but has no readable invoice references. The receipt needs investigation before it can be allocated accurately. Collection reminders should account for that pending match.
Returned checks, duplicate records, short payments, missing references, and scanning errors also need an exception process.
What to review
Agree processing cutoffs, reporting frequency, funds-availability terms, fees, access controls, and integration requirements. There is no universal 24- or 48-hour availability guarantee.
Reconcile provider reports with bank activity and the receivables ledger. Outsourced processing does not remove the business's responsibility to monitor exceptions.
Reference: Treasury explanation of lockbox processing, an example of the service model rather than a universal availability promise.