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Is a Lockbox System an Efficient Payment Processing Solution for Small Businesses?

  • Payment Processing
  • Article
  • 6 min. Read
  • Last Updated: 09/23/2015

lockbox systems for small business payment processing
Banks offer lockbox services to small business customers as a way to assist with check processing and daily deposits. Here are some pros and cons, as well as other factors to consider.

Table of Contents

If payment processing is beginning to take up a greater percentage of work time, a lockbox system may be one way to gain efficiency. Banks offer lockbox services to small business customers as a way to assist with check processing and daily deposits. Here are some pros and cons, as well as other factors to consider.


For small businesses that receive a relatively large amount of mailed payments, a lockbox system can increase the efficiency and accuracy of check processing and potentially save in-house administrative and accounting costs. Checks received in a lockbox are processed and deposited by the bank, usually on the date received. This provides faster access to much needed cash flow. By separating the receipt and processing of payments with the preparation of company financial records, lockboxes can also serve as an effective form of internal control.


The largest con of a lockbox system is expense. Monthly fees can sometimes outweigh the benefits, especially for companies receiving relatively few mail-in payments per month. Lockbox services are often charged with one monthly maintenance fee, plus additional charges on a per-item basis for check processing, check imaging, and handling non-typical items like letters from customers. Thus, lockboxes may not make economic sense for companies with lower transaction volumes. Employees must also learn to use the new service and time must be devoted to training and testing prior to implementation.

Accounting Enhancements

In addition to expense savings and enhanced cash flow, lockbox systems may also provide technological enhancements over current in-house processes. Checks are processed in batches, allowing daily receipts and cash deposits to be monitored online. Payments can be downloaded in a format that interfaces with your online accounting system, allowing for faster updates of accounts receivables. In many cases, the lockbox entries can be posted directly to the general ledger accounts. This electronic delivery of payment information helps to reduce paper and allows all payment support, including check images, to be maintained in digital form.

Evaluating Lockbox Services

Even if a present relationship with a bank exists, some type of due diligence should be performed on the lockbox system. New users will need to gain comfort with system controls and understand the payment processing procedures in place. In cases where manual check processing occurs, a greater potential for error exists. Following up on references or conducting a site visit, if possible, are ways to evaluate lockbox services.

The technological advancements of lockbox systems may now make this process beneficial, even for smaller business. With a pre-existing relationship, banks may add on the lockbox service at discounted rates. When implemented properly, a lockbox system can help improve the accuracy and speed of payment processing, as well as providing meaningful support for accounts receivable management.


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* This content is for educational purposes only, is not intended to provide specific legal advice, and should not be used as a substitute for the legal advice of a qualified attorney or other professional. The information may not reflect the most current legal developments, may be changed without notice and is not guaranteed to be complete, correct, or up-to-date.

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