Four key capabilities of a modern lockbox solution

As payment methods diversify and customer expectations increase, the traditional lockbox processing model has to evolve. The growing complexity of incoming payments — especially non-conforming mail and unstructured transactions — requires smarter, scalable solutions.

This complexity has ushered in a new era of modern lockbox processing, focused on eliminating manual inefficiencies and using intelligent automation tools to improve accuracy and data quality, resulting in faster payment processing. Tom Oberholtzer, director of financial institution sales at Deluxe, and Dave Boyce, senior product architect at Deluxe, uncovered the four capabilities needed to modernize existing lockbox processes.

Virtual batching

One of the standout features of a modern lockbox solution is virtual batching. Historically, manual pre-sorting of incoming payments created bottlenecks, leading to errors and inefficiencies. Virtual batching eliminates the need for labor-intensive pre-sorting by automatically grouping transactions based on business-defined data elements such as P.O. box or reason for payment. This intelligent routing and batching post-scan streamline workflows, reduce error risks and increase productivity. This means faster and more accurate payment processing for customers, enhancing overall satisfaction.

Machine learning-driven recognition

Traditional lockbox systems relied heavily on static templates to recognize payment data, which was a time-consuming and rigid approach. Modern lockbox solutions leverage advanced modeling technology and machine learning to adapt over time, recognizing key payment data without predefined templates. This capability reduces the need for custom setup per customer, speeds up the onboarding process, and increases automation in recognizing check amounts, invoice data, and payer names. This translates to greater flexibility, responsiveness and a significant reduction in manual data entry for businesses.

Historical learning

Modern lockbox systems also incorporate historical learning capabilities, which allow them to remember prior payment behaviors and apply that knowledge to future transactions. This feature is particularly beneficial for handling recurring payments, as it ensures smoother processing and reduces dependency on document completeness. By leveraging historical data, businesses can achieve higher accuracy in applying payments to the correct accounts and accelerate payment matching and reconciliation. Customers benefit from reduced exception rates and faster resolution of payment issues.

Intelligent Character Recognition (ICR) technology

Intelligent Character Recognition (ICR) has long been a key component in lockbox payment processing. Recent advancements in ICR technology have significantly improved its effectiveness, with modern lockbox solutions achieving check read rates of over 95%.1 This high accuracy level reduces the need for manual check amount data entry and enhances speed-to-deposit and audit accuracy. For customers, this means fewer manual touchpoints, faster processing times, and more reliable data accuracy.

Smarter lockbox services for stronger business outcomes

Implementing these advanced capabilities in modern lockbox solutions benefits customers with enhanced efficiency, improved data accuracy, great business flexibility and faster payment resolution. By embracing these modern solutions, businesses and financial institutions can achieve faster, smarter, and more scalable lockbox services, ultimately delivering better business outcomes with reduced friction and increased operational agility.

Source: 1. Internal Deluxe lockbox data.