Kentucky Lock Box Agreement as Cash Management System with Lenders

State:
Multi-State
Control #:
US-03367BG
Format:
Word; 
Rich Text
Instant download

Description

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.

A Kentucky Lock Box Agreement is a cash management system used by lenders that ensures efficient handling of payments made by borrowers. This agreement is commonly utilized to streamline the payment collection process, reduce administrative work, and enhance overall cash flow management. Under this system, borrowers are required to deposit their payments directly into a designated lockbox account located in Kentucky. The lockbox is a secure deposit box operated by a third-party financial institution or a designated lockbox service provider. The funds deposited by the borrowers are then collected, processed, and credited to the lender's account. The Kentucky Lock Box Agreement offers several benefits to both lenders and borrowers. For lenders, it provides an automated and reliable method of receiving payments, eliminating the need for manual processing and potential delays. This system also improves the accuracy of payment reconciliation, as all payments are consolidated in one central location. Borrowers, on the other hand, benefit from the convenience and efficiency offered by the Kentucky Lock Box Agreement. They can easily make their payments by depositing them at a local bank branch in Kentucky, saving time and effort compared to mailing checks or making payments through other channels. Different types of Kentucky Lock Box Agreements may exist based on the specific requirements and preferences of lenders. Some variations of this agreement may include: 1. Standard Kentucky Lock Box Agreement: This is the most common type, where borrowers are required to deposit their payments into a single lockbox account designated exclusively for the lender. All payments made by various borrowers are consolidated and managed through this central account. 2. Multi-Lender Kentucky Lock Box Agreement: In scenarios involving multiple lenders, a multi-lender lockbox arrangement can be established. Each lender has its separate lockbox account within the same facility, allowing for efficient payment handling and segregation of funds. 3. Virtual Kentucky Lock Box Agreement: With advancements in technology, virtual check processing systems are gaining popularity. Virtual lockbox agreements allow borrowers to make payments electronically, using online platforms or mobile banking applications. These systems eliminate the need for physical check deposits. Overall, the Kentucky Lock Box Agreement as a cash management system provides convenience, efficiency, and improved cash flow management for both lenders and borrowers. It ensures that payments are processed in a timely and secure manner, creating a reliable financial infrastructure for lending operations.

A Kentucky Lock Box Agreement is a cash management system used by lenders that ensures efficient handling of payments made by borrowers. This agreement is commonly utilized to streamline the payment collection process, reduce administrative work, and enhance overall cash flow management. Under this system, borrowers are required to deposit their payments directly into a designated lockbox account located in Kentucky. The lockbox is a secure deposit box operated by a third-party financial institution or a designated lockbox service provider. The funds deposited by the borrowers are then collected, processed, and credited to the lender's account. The Kentucky Lock Box Agreement offers several benefits to both lenders and borrowers. For lenders, it provides an automated and reliable method of receiving payments, eliminating the need for manual processing and potential delays. This system also improves the accuracy of payment reconciliation, as all payments are consolidated in one central location. Borrowers, on the other hand, benefit from the convenience and efficiency offered by the Kentucky Lock Box Agreement. They can easily make their payments by depositing them at a local bank branch in Kentucky, saving time and effort compared to mailing checks or making payments through other channels. Different types of Kentucky Lock Box Agreements may exist based on the specific requirements and preferences of lenders. Some variations of this agreement may include: 1. Standard Kentucky Lock Box Agreement: This is the most common type, where borrowers are required to deposit their payments into a single lockbox account designated exclusively for the lender. All payments made by various borrowers are consolidated and managed through this central account. 2. Multi-Lender Kentucky Lock Box Agreement: In scenarios involving multiple lenders, a multi-lender lockbox arrangement can be established. Each lender has its separate lockbox account within the same facility, allowing for efficient payment handling and segregation of funds. 3. Virtual Kentucky Lock Box Agreement: With advancements in technology, virtual check processing systems are gaining popularity. Virtual lockbox agreements allow borrowers to make payments electronically, using online platforms or mobile banking applications. These systems eliminate the need for physical check deposits. Overall, the Kentucky Lock Box Agreement as a cash management system provides convenience, efficiency, and improved cash flow management for both lenders and borrowers. It ensures that payments are processed in a timely and secure manner, creating a reliable financial infrastructure for lending operations.

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Kentucky Lock Box Agreement as Cash Management System with Lenders