Lockbox Services can be classified as a financial management tool, whereby the service provider (financial agent) is responsible for; collecting mail from a specified P.O. Box on behalf of the company, extracting & sequentially arranging the contents, recording a copy of the receipts for future references, and finally depositing the financial instrument into the outsourcing company’s bank account. The outsourcing company receives the account summary either as a hard copy or via electronic format.
The above shown process can be broken down into the following steps:
- The Lockbox Service Provider appoints a post office box for your customers. All payments from the customers will be forwarded to this particular post office box.
- The Lockbox Service Provider will process your mail, arrange and deposit the receipts into the company’s bank account.
- The Lockbox Service Provider will now update the company’s collections department by sending a file of the processed receipts.
- The customer control account and the accounts receivable balance is updated at this point by the collections department.
TYPES OF LOCKBOX
- Wholesale Lockbox is recommended for companies with low volume transactions of large dollar receivables.
- Retail Lockbox is recommended for companies with larger volume of transactions with small dollar receivables.
BENEFITS OF LOCKBOX
- Decrease accounts receivable days
- Maintain a healthy cash operating cycle
- Optimize treasury management
- Segregation of duties to avoid fraud
- Third party records for better audit trail
- Improve liquidity of the company
- Strengthen company’s image
- Provide flexibility to customers
HOW AXPULSE LOCKBOX SERVICES CAN HELP?
AXPulse Lockbox Service application can assist users by decoding the electronic file format, as sent by the Lockbox Service Provider, and processing it into Microsoft Dynamics 365/AX2012.
The application can be configured as described below:
STEP 1: SETUP METHODS OF PAYMENT IN ACCOUNTS RECEIVABLE MODULE
A new method of payment needs to be created, i.e. Lockbox. The payment type is configured to other (1) and the relevant bank details are entered in the Posting section (2).
Under File Format Tab, go to Setup (3) and select AXPLockBox file format (3.1) in the Import Tab. Afterwards the Import format (4) needs to be selected in the drop down field.
STEP 2: PROCESS PAYMENT JOURNAL
Create a new journal (2) with a journal type of customer payments and select Lines (3).
Go to Functions (4) and select Import payments (5) option.
Select the Method of payment (5.1) created earlier in Step 1.
Select OK (5.2) once bank account has been verified and Import incorrect records slider is configured.
Browse and select the Lockbox file (5.3) sent by the Banking Institution/Lockbox Service Provider.
Post the journal. The checks included within the lockbox batch will be shown on the Lines with the Method of payment as Lockbox and the check numbers shown as the Payment reference. Post (6) the journal.
STEP 3: VERIFY RECEIPTS THROUGH THE CUSTOMER LIST PAGE
As shown the below the application is able to update multiple customer account balances, as the lockbox batch can include payments from multiple customers. Furthermore the application also updates any pending invoice balances against an invoice if the invoice is not settled in full.
This application is useful for converting the electronic file format sent by the Lockbox Service Provider into Microsoft Dynamics 365/AX 2012 readable format. The customer account balance is readily updated with the feature of showing any outstanding balances against any specified invoice.