New Life for Wholesale Lockbox

by Amy Hoke 0

For businesses, the lockbox expedites paymentcollection and application. Wholesale lockbox, an old cashmanagement tool, is new again thanks to corporates’ increasedadoption of electronic invoicing solutions. Even though today’sinterest rates are low, high volumes of payments can yieldmeaningful revenue from gains in float. While the early goal of thelockbox was to move paper faster, companies today utilize thelockbox as part of an overall automation effort focused on gettingrid of paper altogether in their invoicing and payments processes.While the effectiveness of lockbox is undisputed, emergingtechnologies have marginalized the traditional wholesale lockbox asa payment processor.

Although technology has replaced some of the need for core lockboxfunctions, businesses have not yet eliminated all paper from theirinvoice and payment processes. Lockbox functions are still needed,just repurposed from their original intent to automate payments. Acase in point is the way that electronic invoicing is utilizingwholesale lockbox functionality as the first step to invoiceautomation. This concept is further explored in the recentlyreleased Mercator Advisory Group Research Report titled Wholesale Lockbox Use Resurging Thanks to ElectronicInvoicing.

Wholesale lockbox isn’t going away anytime soon. Checks are abusiness-to-business payment reality. According to a recentpayments study by the Association of Financial Professionals (AFP),corporates are making about half of their B2B payments via check.That equates to millions of paper-based payments. Corporate successwith “going green” initiatives aside, companies still need and willcontinue to need lockbox services to effectively process checkpayments for some time to come.