When to Request a Lockbox Study

As a general rule, a company should have a lockbox study performed if:

• It currently does not use any lockbox system,
• The company sells nationally but has only one lockbox location,
• The creditor company is using a multiple bank network rather than a network operated by a single bank,
• The current lockbox network locations were selected without the benefit of a formal lockbox study,
• It has been at least two years since the last formal study was completed,
• The creditorís customer base has changed significantly over the last two years,
• The creditor opens a large number of new accounts each year, or has recently completed a merger, an acquisition or a divestiture,
• The company has recently expanded into new geographic markets,
• The lockbox bank has been acquired and/or has closed one or more of the lockbox locations used by the creditor company.

Clearly, in some cases the number and location of lockboxes in the existing network is adequate. In this scenario, a lockbox study is likely to recommend changes involving which customers are asked to remit to which lockbox. A study might recommend a more comprehensive change in which lockboxes are added or deleted from the network, and customers are reassigned based on the location from which customers currently send payments. In certain cases, a complete overhaul is required. It is conceivable that all of the lockboxes the current network will be closed, and an entirely new configuration will be established. In this scenario, every customer would be asked to remit to a new lockbox address.

© 2011.  Michael C. Dennis.  All Rights Reserved.  Michael is the author of "Credit and Collection Handbook."