What is a lockbox system?

A lockbox is a service provided by banks and other financial institutions that allows businesses to receive payments from their customers through a centralized location. It is essentially a post office box that is assigned to the business, and customers send their payments directly to this box. Once the payments are received, the lockbox service provider collects and processes them, and then deposits the funds into the business’s bank account.

How do lockbox systems work?

The lockbox system works in a simple and efficient way. First, the business establishes a lockbox account with the bank or financial institution. The lockbox service provider then provides the business with a unique address for their customers to send payments. Customers send their payments directly to the lockbox, and the lockbox service provider collects and processes them. The funds are then deposited directly into the business’s bank account.

Top payment executive priorities in 2023

Mar. 22, 2023

2 Minutes

How does a corporate payments executive measure success? During a discussion at the 2023 Deluxe Exchange conference in Phoenix, Deluxe’s executive director of non-financial payment sales, Matt Cunningham, asked corporate payments executives to share the most important issues they’ll focus on throughout the rest of the year. Vito Nigro, treasurer and controller for Plymouth Rock Assurance Corporation, and Chip Zint, senior vice president and chief financial officer for Deluxe, offered their insights and shared their payments goals for 2023.

Priority 1: Cash Management

When asked about the key elements within the treasury space that lead to success, Nigro shared his main priorities: the people the insurance company supports and treasury management. “My focus, being in the private sector, tends to be more operational than capital. In my current role, cash management and forecasting are probably the highest priorities on my list,” he said. “As an insurance company, our main asset other than the people is managing cash flow and making sure we’re doing everything we can to minimize unused balances.”

Zint echoed the same thoughts but on the public side. A corporate focus for 2023 is the ability to manage liquidity with the smallest amount of cash that you need to manage working capital to be able to keep your debt low, especially with the rising interest rate environment.

Priority 2: Forecasting

In terms of looking forward, Nigro also works to eliminate or limit the number of surprises as much as possible through forecasting, monitoring any volatility in cash balances and having flexible plans in place to prepare for any adjustments. “We do everything we can to be as efficient as possible with our working capital,” Nigro added.

“I’ve impressed on the team constantly to just keep the revolver as low as possible, minimize the interest expense, be very accurate, eliminate surprises, stay on top of your cash forecasting so that you're always on top of your borrowings and repayments and minimize your interest expense and really just keep the cash out there that's needed for working capital,” explained Zint.

From a forecasting standpoint, Nigro shared that a reliance on technology and finding the right tools and AI technology can help corporates leverage historical data. On the insurance side, historical data can help predict and forecast future outcomes. By using or relying on technology to help automate some of the repetitive forecasting tasks, the company saves time and effort.

Priority 3: Focus on automation and efficiency

One of the top things Zint shared as a focus for 2023 is building efficiency and automation through process change and technology. “This is a year about not only getting better at what we do but eliminating manual work and helping to improve our cost effectiveness across all our segments,” he explained.

By using technology, Nigro also has efficiency and automation in mind when handling insurance claims and managing the corporation’s working capital. “For us it’s all about leverage technology as much as we can to eliminate some of those less challenging, more mundane tasks so that staff can focus more of their time on analytics and growing through the data,” said Nigro. “This helps us move towards trying to help make better business decisions and improve the overall profitability of the company.”

Priority 4: Identify competitive differentiators

Corporates, both private and public, continue to focus on how to differentiate their offerings from those of their competitors. For Plymouth Rock Assurance, Nigro shared that this company stands out for its level of service, speed of payment and payment choice.

“At Plymouth Rock, we distinguish ourselves from our competitors in terms of the level of service we provide,” said Nigro. “Our mission is to provide a service at a time when the policyholder is in a time of need. We want to be able to handle that claim work as quickly as possible and get money to the person as fast as possible.”

With no perfect payment solution, offering multiple payment methods (based on what works best for each claimant) helps the insurance company remain relevant and maintains a positive experience with their customers.

Source:

Matt Cunningham, Chip Zint and Vito Nigro, "Corporate Treasury Management: Success Starts Here." Recorded at Deluxe Exchange 2023, Phoenix, February 2023.