All 23 Cash Application questions
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What happens to the AR balance when a receipt is applied? How does automated cash application (auto-matching) work? How do you handle a short payment or overpayment during cash application? What are customer deductions (chargebacks) and how are they managed? How are returned/NSF customer payments handled after they were applied? How is customer credit balance or prepayment handled in AR? How are bank fees and card-processing fees on receipts accounted for? What is a suspense account and how is it used in cash application? What is straight-through cash application and what blocks it? How does cash application affect the accuracy of collections activity?
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Accounts Payable & Receivable › Cash Application

What is a lockbox and how does it help cash application?

Intermediate

Answer

A lockbox is a bank service that receives and processes customer check payments on the company's behalf, capturing remittance data and depositing funds faster. The bank provides a daily file of payments and remittance detail that feeds cash application, accelerating deposits and improving auto-matching for check-heavy businesses.
Real-world example A utility's mailed checks go to a bank lockbox that deposits funds and sends a remittance file the AR system applies automatically.

Common follow-ups: How does a lockbox speed up cash? | What data does the lockbox file provide?

Reconciliations Payment Runs Cash Application
All 23 Cash Application questions