Though "lockbox" is hardly mentioned in national elections anymore, the venerable wholesale lockbox is becoming a more efficient payment processing factory, and aggressive banks are building out their lockbox operations to provide more comprehensive receivables management solutions. "Our end-to-end process gets faster all the time," boasts Doug Hartsema, managing director of J.P. Morgan Treasury Services. "And error rates keep coming down. Every year we beat our previous year's performance. For banks that invest in the best technology, the product keeps getting better and better." And just in time. With the current rocky economy and credit crunch, treasuries want quicker availability on incoming payments and are optimizing their processes to get it, reports Annette Hazapis, director of collection product management at KeyBank. That has modestly boosted demand for lockbox services, she says. "Some companies that have never used wholesale lockbox are now actively considering it."
Two relatively recent innovations are helping treasuries expedite availability. One is the technological ability and the legal authority to convert a paper check into an electronic check image and transmit the image through check-clearing channels. The other is the back-office conversion initiative that permits companies to convert consumer checks to Automated Clearing House (ACH) transactions in their own back office and then clear the payments through ACH channels. Which way is better depends on individual circumstances, Hazapis says, but both are more efficient and result in quicker availability than physically transporting paper.