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What Is Lockbox in Account Receivables

AutoLockbox is a tool in Oracle that allows banks to process customer payment receipts and transmit the payment data to the customer's accounts receivable system automatically. It eliminates manual data entry by processing receipts sent directly to the bank. The bank collects payments and sends payment data to be imported into the customer's system. If the data is validated, it will create receipt batches and apply payments to customer invoices. This allows customers to have payments processed faster and more efficiently.

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319 views3 pages

What Is Lockbox in Account Receivables

AutoLockbox is a tool in Oracle that allows banks to process customer payment receipts and transmit the payment data to the customer's accounts receivable system automatically. It eliminates manual data entry by processing receipts sent directly to the bank. The bank collects payments and sends payment data to be imported into the customer's system. If the data is validated, it will create receipt batches and apply payments to customer invoices. This allows customers to have payments processed faster and more efficiently.

Uploaded by

Jeetendra Achary
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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What Is Lockbox in Account Receivables?

AutoLockbox is a very powerful tool provided by Oracle as it eliminates manual


data entry by automatically processing receipts that are sent directly to your
bank. You specify how you want this information transmitted and receivables
ensures that the data is valid before creating QuickCash receipt batches.

Introduction:

AutoLockbox (or Lockbox) is a service that commercial banks offer corporate customers to
enable them to outsource their accounts receivable payment processing. A lockbox operation can
process millions of transactions a month.

Lockbox functionality allows customer to deposit the money directly into your bank account for
the due invoices and the banker provides a data file to you. You need to have a Lockbox set up to
create a Transmission Format which matches the data file format in your instance.

Auto Lockbox

AutoLockbox automatically creates receipts in Receivables using electronic information that


your bank provides. Receivables let you specify the payment method for each Lockbox you
define. Payment methods provide the default accounting information for receipts you create
through AutoLockbox.

The entire business flow can be best understood as:

Examples for Lockbox: Check

Many of us pay our mobile bills by dropping a check in a drop box specific to the operators like
Airtel, Idea and Vodafone for instance. The banker collects all the cheques and realizes the check
amount on behalf of the operators. While dropping the cheque the customer mentions the details
like his or her mobile number and operators name at the backside of the cheque. By this
information (like Mobile Number, Customer Name etc.,) all the realized amounts will be sent to
the operator through a Flat file or an excel file.

When you run the Lockbox concurrent process the system checks the data file and matches the
transmission format. If found to be a match it creates a receipt in the Receivables Module and
then applies it to the invoices based on the set up you have opted for the lockbox.

If the invoice does not match then the system places the amount as unapplied receipt or on
account receipt according to your setup.

Generally data is imported using SQL Loader or a Web ADI.

Auto Lockbox is a feature that bank offers its customer to outsource their receivable payment
processing, thus eliminating the manual data entry by processing automatic receipts which are
sent directly to the bank.

To Execute Auto Lockbox follow these steps:

Import: During this step it reads & formats the data from the bank file into the interface table
AR_PAYMENTS_ALL using the SQL loader.

Validation: Here it checks the validation and if validated it will transfer to Quick cash tables
AR_INTERIM_CASH_RECEIPTS_ALL & AR_INTERIM_CASH_RCPT_LINES_ALL.

Post Quick: Here it will update the customer balance.

Bank File (Submit Import) --> AR_PAYMENTS_INTERFACE_ALL (Submit Validation)

--> AR_INTERIM_CASH_RECEIPTS_ALL,
AR_INTERIM_CASH_RCPT_LINES_ALL (Submit Post Quickcash)

--> AR_CASH_RECEIPTS_ALL, AR_CASH_RECEIPTS_ALL,

AR_CASH_RECEIPT_HISTORY_ALL, AR_DISTRIBUTIONS_ALL,
AR_RECEIVABLE_APPLICATIONS_ALL, AR_PAYMENT_SCHEDULES_ALL

The steps on how to define auto Lockbox are given below:

 Define the bank, branch and the bank account


 Define Receipt Class for the Auto Lockbox
 Define the Receipt Source
 Define the Autocash Ruleset
 Define Customer - Attach the receipt method and create the customer bank account (Branch number and
account number together decides the MICR number)
 Define Lockbox (Setup --> Receipts --> Lockboxes --> Lockboxes)
 Define Transmission Formats (Setup --> Receipts --> Lockboxes --> Transmission Formats)
 Modify (or create a new one) the existing control file to suit the above formats
 Run Autolockbox
 Submit Validation
 Submit Post Quickcash

Conclusion:

AutoLockbox is a very powerful tool provided by Oracle as it eliminates manual data entry by
automatically processing receipts that are sent directly to your bank. You specify how you want
this information transmitted and receivables ensures that the data is valid before creating
QuickCash receipt batches. You can automatically identify the customer who remitted the receipt
and optionally use AutoCash rules to determine how to apply the receipts to your customers’
outstanding debit items. The major benefit of using LockBox is that company is able to
recognize the funds more quickly and customers’ check is cashed faster.

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