Lockbox --Think inside Box.

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-- Some timesthink “Inside Box”

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Thank You

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Agenda  File Processors Majorly used File processors  Lock Box  US Bank File: New AR Payments  US Bank File: Collected AR Payments  Benefits of Lockbox  How do you prevent this type of crime?  Highlights  What can lockbox banking do for you?  Highlights of lockbox banking  Bank Examples  Lockbox in nutshell  European Processing: SWIFT MT940

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File Processors  Doyour customers mail payments to you?  Are your customers dispersed across a region or the country?  Do you hold checks over a day or two because your staff doesn’t have the time to process them?

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Majorly used Fileprocessors  Lock - Box Processing  Swift MT 940

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US Bank File:New AR Payments Customer Customer Invoice AR Payment Check Bank Lock Box

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Customer Collecting Money Own Bank Customer Bank AR, Payment Check USBank File: Collected AR Payments collected check numbers Payment Receipts

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Benefits of Lockbox A streamlined customer payment process,  Reduced overhead costs due to process automation,  A decreased error rate.

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How do youprevent this type of crime?  Monitor lockbox operations more closely;  Locate lockbox operations far from a photocopy machine;  Make random, unexpected visits to the lockbox area;  Be careful who you hire;  Be alert to the possibility of fraud; such as when a customer notifies you that a counterfeit item has been paid on his account.

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What can lockboxbanking do for you?  Faster access to your funds  More timely receivables information  Customized Remittance Processing  Greater Remittance Processing  More Efficient use of your office Staff

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Highlights of lockboxbanking  Lockbox processing is a cash management service provided by banks to their corporate customers. Lockbox services are designed to accelerate the collection and deposit of check payments, sent with accompanying remittance document(s), through the mail.  Lockbox services are provided almost exclusively by large banks. Of a total of 4.1 billion checks processed by U.S. banks in lockbox operations in 1994, 75 percent were processed by banks with over $5 billion in assets, and over 98 percent were processed by banks with over $1 billion in assets.  Retail lockbox tends to involve higher processing volumes than wholesale lockbox. The leading retail lockbox bank processes about 27 million items per month, while the leading wholesale lockbox bank processes only about 4 million items per month.

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Few more numbers The primary cost component of lockbox processing is the per item fee. For wholesale lockboxes, the per item fee might range from $.50 to $1.00. For retail lockboxes, the per item fee might range from $.15 to $.30 for matched items (i.e., one coupon and one check with matching dollar amounts).

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Numbers Contd… The peritem fee for retail lockbox items is increased for:  Multiples (i.e., one coupon with more than one check or the reverse),  Mismatched items (i.e., coupon and check amounts do not match),  Check only (i.e., no coupon), and  Reject items (e.g., coupon only with no check).

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The one fundBoston turn tragedy into triumph (Bank success in Lock Box)  The bank team cleared a backlog of 10,000 pieces of mail just 36 hours after going live,” Gandolfo says. “We centralized all cash and check donations and captured envelope images to track donor addresses, which makes it possible to communicate with them in the future.”

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Lockbox in nutshell Reduced float, including mail and processing float.  Accelerated funds availability.  Receipts are transmitted for automated download and posting/crediting to individual accounts by government treasurers.  Improved accuracy in the collection process.  An audit trail is established.  Reduced internal staffing costs due to outsourcing and/or the reallocation of staff to higher-value tasks.  Reduced processing delays that would have been associated with sick time, vacation, and holidays taken by internal staff.  Possible reduction in future hiring and training needs associated with growth in payments.

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European Processing: SWIFT MT940 Commonly used throughout Europe  It is exclusively used for Bank Statement lines.  The SWIFT MT940 files has a predefined structure of,  Header  Section with transaction  Footer

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Advancements in Lock-Box Intelligent character recognition (ICR),  Optical character recognition (OCR), and  Courtesy amount read (CAR).

Lockbox --Think inside Box.

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