Lockbox services turn receivables into cash fast

It's a safe bet that you didn't go into business soley for the opportunity of processing paperwork.

Most people find handling paperwork one of the most daunting and unwelcome tasks that accompany business ownership. Yet how you manage the documentation of your business can have a great impact on how successful your business ultimately is.

For example, deposit and invoice processing is a time-consuming and exacting job for many businesses. Yet, if done correctly, it can greatly accelerate cash flow, an important factor that contributes to a business's success.

You may be spending valuable time collecting payments, preparing deposits and going to the bank when you could be spending time building your business. That's why many business owners look for outside help for these tasks.

Lockbox services

If you would like to have the use of your receivables more quickly with less effort on your part, consider lockbox services that automate deposit and invoice processing. Lockbox services can speed all three components to the cash flow equation: mail processing, deposit preparation and check clearing.

With lockbox services, payments made by customers to your business are mailed directly to a central location and given dedicated processing.

This service can provide more rapid and reliable handling, resulting in accelerated cash receipt and efficient accounts receivable processing.

Mail arriving at the central location is collected several times a day, including weekends. The checks are taken to a processing area, where deposit processing is an around-the-clock operation.

Once the payments are processed and the checks are cleared, the funds are automatically transferred on the same day from the financial institution to the business owner's account.

The process reduces mail-processing delays, typically the largest component of lost time in the collection process. In addition, acceleration of accurate deposit information is another benefit of this service.

The institution handling the processing captures and delivers invoice information for automatic receivables update or credit review.

All backup data, including a summary deposit report and a check photocopy associated to the invoice data, can be processed and delivered directly to the business owner via electronic transmission, fax, overnight courier or first-class mail.

Link to a central asset account

The more integrated your cash management systems, the more efficient your business operations will be. When you're looking for lockbox services, ask whether you can link these services to your business's central asset account.

By having the lockbox service imbedded in a central asset account, customers' payments can be processed and deposited directly into your account, where the assets will immediately begin earning money.

Within the account, you'll have access to a broad selection of short- and intermediate-term investment vehicles.

Consider assistance

You owe it to your business to consider any services that can cut down on the time and money you spend on administrative tasks. Lockbox services can provide an easier, faster more cost-effective way to turn receivables into cash.

Talk to your financial consultant about how to combine the benefits of lockbox processing with your business's central asset account.

(John Qua is senior vice president and director of business financial services for Merrill Lynch.)