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.
Connecticut Lock Box Agreement as a Cash Management System with Lenders A Connecticut Lock Box Agreement is a financial arrangement established between a borrower and a lender in the state of Connecticut to enhance cash management and streamline loan repayments. This agreement involves the use of a lock box to collect, process, and distribute incoming payments made by borrowers. Furthermore, it allows lenders to closely monitor cash flow and ensures timely repayment of loans. Below, we will explore the different types of Connecticut Lock Box Agreements commonly used as cash management systems with lenders: 1. Standard Connecticut Lock Box Agreement: This is the most common type of lock box agreement used by lenders in Connecticut. Under this arrangement, borrowers are required to remit their payments to a designated post office box or a specific bank account. Once the payments are received, they are processed by the lender's designated financial institution. The lender closely monitors this process to ensure accurate and timely crediting of payments. Subsequently, the lender deducts the loan installment and any associated fees or charges before forwarding the remaining funds to the borrower's account. 2. Automated Clearing House (ACH) Connecticut Lock Box Agreement: This type of lock box agreement utilizes the ACH payment system to automate the payment collection process. Borrowers authorize their banks to automatically transfer funds directly to the lender's designated account on specific due dates. This eliminates the need for physical checks and expedites the payment processing timeline, enhancing cash management for both borrowers and lenders. 3. Online Payment Platform Connecticut Lock Box Agreement: With the increasing popularity of online payment platforms, some lenders in Connecticut have adopted this type of lock box agreement. Borrowers are provided with access to a secure online portal to make their loan payments. The online platform integrates with the lender's cash management system, facilitating efficient processing and immediate updating of payment records. Borrowers can conveniently schedule recurring payments or make one-time payments, ensuring smooth loan repayment. 4. Remote Deposit Capture (RDC) Connecticut Lock Box Agreement: In this type of agreement, borrowers are provided with specialized scanners or mobile applications that allow them to electronically submit check payments to the lender remotely. The electronic images of the checks are securely transferred to the lender's designated bank, eliminating the need for physical transportation. The lender's financial institution then processes the checks, ensuring speedy clearance and deposit. This type of lock box agreement offers convenience, efficiency, and reduced processing costs for both borrowers and lenders. In conclusion, a Connecticut Lock Box Agreement as a Cash Management System with Lenders provides an effective and efficient method of loan repayment. By utilizing different types of lock box agreements, borrowers and lenders can choose the most suitable option to meet their specific needs. These agreements streamline the payment collection process, enhance cash management, and ensure the timely and accurate repayment of loans.Connecticut Lock Box Agreement as a Cash Management System with Lenders A Connecticut Lock Box Agreement is a financial arrangement established between a borrower and a lender in the state of Connecticut to enhance cash management and streamline loan repayments. This agreement involves the use of a lock box to collect, process, and distribute incoming payments made by borrowers. Furthermore, it allows lenders to closely monitor cash flow and ensures timely repayment of loans. Below, we will explore the different types of Connecticut Lock Box Agreements commonly used as cash management systems with lenders: 1. Standard Connecticut Lock Box Agreement: This is the most common type of lock box agreement used by lenders in Connecticut. Under this arrangement, borrowers are required to remit their payments to a designated post office box or a specific bank account. Once the payments are received, they are processed by the lender's designated financial institution. The lender closely monitors this process to ensure accurate and timely crediting of payments. Subsequently, the lender deducts the loan installment and any associated fees or charges before forwarding the remaining funds to the borrower's account. 2. Automated Clearing House (ACH) Connecticut Lock Box Agreement: This type of lock box agreement utilizes the ACH payment system to automate the payment collection process. Borrowers authorize their banks to automatically transfer funds directly to the lender's designated account on specific due dates. This eliminates the need for physical checks and expedites the payment processing timeline, enhancing cash management for both borrowers and lenders. 3. Online Payment Platform Connecticut Lock Box Agreement: With the increasing popularity of online payment platforms, some lenders in Connecticut have adopted this type of lock box agreement. Borrowers are provided with access to a secure online portal to make their loan payments. The online platform integrates with the lender's cash management system, facilitating efficient processing and immediate updating of payment records. Borrowers can conveniently schedule recurring payments or make one-time payments, ensuring smooth loan repayment. 4. Remote Deposit Capture (RDC) Connecticut Lock Box Agreement: In this type of agreement, borrowers are provided with specialized scanners or mobile applications that allow them to electronically submit check payments to the lender remotely. The electronic images of the checks are securely transferred to the lender's designated bank, eliminating the need for physical transportation. The lender's financial institution then processes the checks, ensuring speedy clearance and deposit. This type of lock box agreement offers convenience, efficiency, and reduced processing costs for both borrowers and lenders. In conclusion, a Connecticut Lock Box Agreement as a Cash Management System with Lenders provides an effective and efficient method of loan repayment. By utilizing different types of lock box agreements, borrowers and lenders can choose the most suitable option to meet their specific needs. These agreements streamline the payment collection process, enhance cash management, and ensure the timely and accurate repayment of loans.
