Quick Finance Tip - Lockbox and Accounts Receivables

A lockbox system allows a company to receive their payments from the payee, by the payee sending their payments directly to the bank. The important implication here, other than reducing the labor hours in processing payments in house, is that it will reduce the company's collection float, or the time the funds are made available. Also, this will then reduce the cash conversion cycle and it does make the company more efficient.