Accounting Dictionary - Letter L

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Lockbox
is a separate post office box used to collect customer remittances, which are periodically collected and deposited (all at once) by a bank. The bank also furnishes the company with a listing of payments collected (by account) and a daily total as well as the copies of customer deposits and anything else contained in the customer remittances. The lockbox system reduces the mail float, increases the flow of cash to the company's bank account, and eliminates transaction-processing time. However, there usually is a fixed monthly fee for the box and a charge for every processed check. Thus, lockbox won't be cost-effective for companies with a small number of customers or many low-volume customers.
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