A lock box agreement is a service offered by banks to companies in which the company receives payments by mail to a post office box and the bank picks up the payments several times a day, deposits them into the company's account, and notifies the company of the deposit. This enables the company to put the money to work as soon as it's received, but the amounts must be large in order for the value obtained to exceed the cost of the service.
This lock box agreement is to be used by the collateral agent for a syndicate of banks to receive, control and apply to the Borrower's line of credit, payments made on the debtor's accounts receivable collateral. This agreement when executed, perfects the secured party's security interest in funds in the lock box account by control under Uniform Commercial Code § 9-104(a)(3) by making the agent bank the owner of and party in whose name the account is held. Because the account is controlled by ownership in the name of the secured party, the lock box bank cannot offset claims it has against the debtor against the account as provided in Uniform Commercial Code § 9-340(c). To avoid any doubt on this issue, the lock box bank expressly waives its rights of setoff. On the other hand, the agent bank agrees to indemnify the lock box bank for any unpaid fees or claims concerning the account, in the event the debtor fails to do so.
This form is a generic example that may be referred to when preparing such a form for your particular state. It is for illustrative purposes only. Local laws should be consulted to determine any specific requirements for such a form in a particular jurisdiction.
The Arizona Lock Box Agreement is a crucial cash management system used by lenders to efficiently manage their funds. It is a contractual arrangement between a lender and a financial institution, where the lender designates the institution as the receiver of payments on behalf of the borrower. The primary purpose of this agreement is to streamline the collection process and ensure that funds are promptly received and credited to the lender's account. One of the main advantages of implementing an Arizona Lock Box Agreement is the ability to expedite the payment collection cycle. With this system in place, borrowers are instructed to make their payments directly to the designated lock box address, which is typically operated by a third-party financial institution. The lock box facility efficiently collects these payments, typically in form of checks, money orders, or electronic transfers. The financial institution then expedites the deposit process, ensuring the prompt crediting of funds to the lender's account. By utilizing the Arizona Lock Box Agreement, lenders can optimize cash flow management, as the agreement typically includes provisions for daily deposits and remittance reports. This enables lenders to gain real-time visibility into their cash position and make informed decisions regarding liquidity management, investment strategies, and fund allocation. Furthermore, the Arizona Lock Box Agreement also offers enhanced security measures. The designated lock box address eliminates the risk of payments being misdirected or lost in transit. It ensures a secure and reliable intermediary channel for payment collection, minimizing the potential for theft or fraud. It is worth noting that there are several types of Arizona Lock Box Agreements available to lenders, each with its unique features and benefits. These include: 1. Traditional Lock Box Agreement: In this arrangement, the lender designates a specific physical address for borrowers to mail their payments. The financial institution operates and manages the lock box, collecting and depositing the payments. 2. Virtual Lock Box Agreement: With the advancement of technology, lenders can now utilize virtual lock boxes. In this case, borrowers make payments electronically via secure online payment portals or through automated clearing house (ACH) transfers. The financial institution receives, processes, and deposits these electronic payments on behalf of the lender, providing a seamless and efficient collection process. 3. Remote Deposit Capture Lock Box Agreement: This type of lock box agreement combines the advantages of traditional and virtual lock boxes. Lenders provide borrowers with the ability to scan and digitally deposit their checks, enabling the financial institution to receive and process these payments electronically, reducing physical handling and improving efficiency. In summary, the Arizona Lock Box Agreement is a vital cash management system that lenders employ to enhance the efficiency of their payment collection process. With various types of lock boxes available, lenders can choose the most suitable option that aligns with their specific needs and preferences. By utilizing this system, lenders can optimize cash flow management, improve security, and gain valuable insights into their financial position.The Arizona Lock Box Agreement is a crucial cash management system used by lenders to efficiently manage their funds. It is a contractual arrangement between a lender and a financial institution, where the lender designates the institution as the receiver of payments on behalf of the borrower. The primary purpose of this agreement is to streamline the collection process and ensure that funds are promptly received and credited to the lender's account. One of the main advantages of implementing an Arizona Lock Box Agreement is the ability to expedite the payment collection cycle. With this system in place, borrowers are instructed to make their payments directly to the designated lock box address, which is typically operated by a third-party financial institution. The lock box facility efficiently collects these payments, typically in form of checks, money orders, or electronic transfers. The financial institution then expedites the deposit process, ensuring the prompt crediting of funds to the lender's account. By utilizing the Arizona Lock Box Agreement, lenders can optimize cash flow management, as the agreement typically includes provisions for daily deposits and remittance reports. This enables lenders to gain real-time visibility into their cash position and make informed decisions regarding liquidity management, investment strategies, and fund allocation. Furthermore, the Arizona Lock Box Agreement also offers enhanced security measures. The designated lock box address eliminates the risk of payments being misdirected or lost in transit. It ensures a secure and reliable intermediary channel for payment collection, minimizing the potential for theft or fraud. It is worth noting that there are several types of Arizona Lock Box Agreements available to lenders, each with its unique features and benefits. These include: 1. Traditional Lock Box Agreement: In this arrangement, the lender designates a specific physical address for borrowers to mail their payments. The financial institution operates and manages the lock box, collecting and depositing the payments. 2. Virtual Lock Box Agreement: With the advancement of technology, lenders can now utilize virtual lock boxes. In this case, borrowers make payments electronically via secure online payment portals or through automated clearing house (ACH) transfers. The financial institution receives, processes, and deposits these electronic payments on behalf of the lender, providing a seamless and efficient collection process. 3. Remote Deposit Capture Lock Box Agreement: This type of lock box agreement combines the advantages of traditional and virtual lock boxes. Lenders provide borrowers with the ability to scan and digitally deposit their checks, enabling the financial institution to receive and process these payments electronically, reducing physical handling and improving efficiency. In summary, the Arizona Lock Box Agreement is a vital cash management system that lenders employ to enhance the efficiency of their payment collection process. With various types of lock boxes available, lenders can choose the most suitable option that aligns with their specific needs and preferences. By utilizing this system, lenders can optimize cash flow management, improve security, and gain valuable insights into their financial position.
