Lockbox collection is a payment processing service provided to the service providers by banks for collecting payments (in cash or checks) through lockbox. It is a cash flow improvement technique in which customers' payments are delivered to a special safety deposit box instead of the service provider's business address.
In lockbox collection process, the banks make several collections per day, process the payments immediately, and deposit the funds into the service provider's bank account. Service providers prefer Lockbox collection process to speed up the cash collection cycle.
The customer payments made to the banks (through lockbox) are maintained in collection files and uploaded periodically. On successful completion of the process, the corresponding customers' accounts get credited and the bank account gets debited.
At the time of upload process, if any customers account number is not identified in the system then such payments are marked as unidentified payments. Generally, the unidentified payments are received against the incorrect account numbers are maintained in a separate account called as Suspense Account. The payments received against the suspense account are treated as Suspense Payments. Later, on identification the amount gets credited to the respective customer's account.
Note: Lockbox Payment upload process is used for uploading collection files received from external source.