Dictionary of Banking Terms: lock box
lock box
post office box used by organizations to accelerate collection of receivables. Checks are routed to a designated P.O. box number, where they are picked up several times during the day, separated from the envelopes, and submitted to the check collection system for conversion into cash receivables. Many large banks offer lock box processing as a cash management service to corporate customers. A lock box can be retail, designed for remittance processing for consumer accounts, or wholesale, in which payments from other corporations are collected and submitted through Depository Transfer Check or electronic debit into a concentration account for investment and disbursement as needed.
Dictionary of Business Terms: lock box
lock box
- cash management system whereby a company's customers mail payments to a post office box near the company's bank. The bank collects checks from the lock box (sometimes several times a day), deposits them to the account of the firm, and informs the company's cash manager by telephone of the deposit.
- In residential real estate sales, a small locked box placed near the front door in which the key to enter the house is inserted. Only real estate agents possess the key or combination to unlock the box; thus the key to the house is reasonably secure, while allowing agents to enter the property offered for sale.
Dictionary of Finance and Investment Terms: lock box
lock box
- cash management system whereby a company's customers mail payments to a post office box near the company's bank. The bank collects checks from the lock box-sometimes several times a day-deposits them to the account of the firm, and informs the company's cash manager by telephone of the deposit. This reduces processing float and puts cash to work more quickly. The bank's fee for its services must be weighed against the savings from reduced float to determine whether this arrangement is cost-effective.
- bank service that entails holding a customer's securities and, as agent, receiving and depositing income such as dividends on stock and interest on bonds.
- box rented in a post office where mail is stored until collected.
