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.
Utah Lock Box Agreement as Cash Management System with Lenders: The Utah Lock Box Agreement is a cash management system designed to facilitate prompt and secure payment processing for lenders. This agreement is commonly used by financial institutions, such as banks and credit unions, to manage loan payments and ensure efficient funds distribution. With a Utah Lock Box Agreement, lenders can transfer the responsibility of collecting borrower payments to a lock box provider, typically a third-party service provider specializing in payment processing. The lock box provider receives the borrower's payments on behalf of the lender and processes them in a timely manner. The primary purpose of the Utah Lock Box Agreement is to streamline the payment collection process and enhance cash flow management for lenders. By centralizing payment processing, lenders can improve their operational efficiency, reduce administrative costs, and minimize the risk of fraud or payment mishandling. Different types of Utah Lock Box Agreements may exist, tailored to meet the specific needs and preferences of lenders. Some common variations include: 1. Traditional Lock Box Agreement: This is the standard form of the agreement, where the lock box provider receives borrower payments via mail, physical drop-off, or at designated payment centers. The provider collects and deposits the payments into a locked account, which the lender can access for reconciliation and funds management. 2. Electronic Lock Box Agreement: With advancements in technology, lenders can opt for an electronic lock box agreement. In this setup, borrowers make payments electronically through various channels, such as online transfers, automated clearing house (ACH) transactions, or credit/debit card payments. The lock box provider securely receives and processes these electronic payments for the lender. 3. Remote Deposit Capture Lock Box Agreement: This type of lock box agreement utilizes remote deposit capture technology. Borrowers can deposit their payments directly into the lender's lock box account via a secure online portal or mobile application. The lock box provider verifies the authenticity of the deposit and ensures prompt funds availability to the lender. Regardless of the specific type of Utah Lock Box Agreement, the key benefits remain consistent. Lenders can enhance their cash flow visibility, reduce the risk of payment fraud, and improve overall customer satisfaction by offering efficient payment processing options. It also enables lenders to focus on their core activities while relying on the lock box provider's expertise in payment management. In summary, the Utah Lock Box Agreement as a cash management system with lenders offers a comprehensive solution for payment processing, allowing lenders to optimize their cash flow and reduce administrative burdens. The different variations of the agreement cater to the diverse needs and preferences of lenders, facilitating secure and efficient payment collection.Utah Lock Box Agreement as Cash Management System with Lenders: The Utah Lock Box Agreement is a cash management system designed to facilitate prompt and secure payment processing for lenders. This agreement is commonly used by financial institutions, such as banks and credit unions, to manage loan payments and ensure efficient funds distribution. With a Utah Lock Box Agreement, lenders can transfer the responsibility of collecting borrower payments to a lock box provider, typically a third-party service provider specializing in payment processing. The lock box provider receives the borrower's payments on behalf of the lender and processes them in a timely manner. The primary purpose of the Utah Lock Box Agreement is to streamline the payment collection process and enhance cash flow management for lenders. By centralizing payment processing, lenders can improve their operational efficiency, reduce administrative costs, and minimize the risk of fraud or payment mishandling. Different types of Utah Lock Box Agreements may exist, tailored to meet the specific needs and preferences of lenders. Some common variations include: 1. Traditional Lock Box Agreement: This is the standard form of the agreement, where the lock box provider receives borrower payments via mail, physical drop-off, or at designated payment centers. The provider collects and deposits the payments into a locked account, which the lender can access for reconciliation and funds management. 2. Electronic Lock Box Agreement: With advancements in technology, lenders can opt for an electronic lock box agreement. In this setup, borrowers make payments electronically through various channels, such as online transfers, automated clearing house (ACH) transactions, or credit/debit card payments. The lock box provider securely receives and processes these electronic payments for the lender. 3. Remote Deposit Capture Lock Box Agreement: This type of lock box agreement utilizes remote deposit capture technology. Borrowers can deposit their payments directly into the lender's lock box account via a secure online portal or mobile application. The lock box provider verifies the authenticity of the deposit and ensures prompt funds availability to the lender. Regardless of the specific type of Utah Lock Box Agreement, the key benefits remain consistent. Lenders can enhance their cash flow visibility, reduce the risk of payment fraud, and improve overall customer satisfaction by offering efficient payment processing options. It also enables lenders to focus on their core activities while relying on the lock box provider's expertise in payment management. In summary, the Utah Lock Box Agreement as a cash management system with lenders offers a comprehensive solution for payment processing, allowing lenders to optimize their cash flow and reduce administrative burdens. The different variations of the agreement cater to the diverse needs and preferences of lenders, facilitating secure and efficient payment collection.
