Lockbox Processing

The basic operation of a lockbox system is fundamental to large businesses but is almost transparent to those without some knowledge of corporate treasury operations. The objective of a lockbox operation is to have the customer remit a payment check to a local post office box to minimize mail transit time. The checks are processed by the bank on a daily basis and the funds collected are usable by the receiving business much quicker than with the traditional process. The illustration below shows the basic operation of the lockbox and how SAP fits in.

The bank sends XYZ, Inc. a detail data file of the checks posted to its account along with a daily total. The data is transmitted using BAI or BAI2 format. The SAP lockbox program translates the file and posts to a GL cash account, creates payment advices that are matched against accounts receivable open items and clears those items.

Lockbox Architecture

There are 3 general steps in the proessing:

1. Receive a file of check data from the bank. Some banks allow dial in and download.
2. Execute the Lockbox Import Program
   • Post the G/L transaction reflecting the receipt of cash
   • Creates a payment advice. Open items are automatically cleared/
3. Access the lockbox post-process transaction to process any checks that could not be fully applied by the Lockbox Import Program