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.
Queens New York Lock Box Agreement as Cash Management System with Lenders A Queens New York Lock Box Agreement is a cash management system commonly used by lenders in the lending industry. It is designed to ensure the secure and efficient handling of borrower payments. In this type of agreement, the borrower's payments, such as loan installments or rent payments, are directed to a designated mailing address in Queens, New York. These payments are collected by a third-party administrator known as a lock box bank. The lock box bank acts as an intermediary in the payment collection process. Once received, the lock box bank promptly processes the payments, often within a day or two. The funds are then deposited into a separate lock box account, which is typically held at a financial institution in Queens, New York. This segregated account ensures that the funds remain separate from the lender's operational accounts, promoting transparency and accountability. The Queens New York Lock Box Agreement offers several benefits for lenders: 1. Enhanced Security: By utilizing a lock box system, lenders can significantly reduce the risk of loss or theft associated with traditional payment collection methods, such as checks being lost in the mail or mishandled. 2. Streamlined Cash Flow: The lock box bank's prompt processing of payments ensures a consistent and reliable cash flow for the lender. This is particularly important for lenders who rely on a steady stream of payments to maintain their operations. 3. Improved Efficiency: The lock box system eliminates the need for lenders to manually process and deposit payments, saving valuable time and resources. This allows lenders to focus on other critical aspects of their operations. 4. Audit Trail: The use of a separate lock box account provides a clear and traceable record of all payment transactions, which can be crucial during audits or legal disputes. Different types of Queens New York Lock Box Agreements as Cash Management Systems with Lenders include: 1. Standard Lock Box Agreement: This is the most common type of lock box agreement where the lock box bank receives and processes all borrower payments. 2. Advanced Lock Box Agreement: In this type of agreement, the lock box bank not only collects and processes payments but also offers additional services such as electronic funds transfer (EFT) and online payment portals. 3. Sub-Lock Box Agreement: Sometimes lenders opt to establish multiple lock box accounts for specific types of loans or borrowers. This allows for more customized management and tracking of payments. In conclusion, a Queens New York Lock Box Agreement as a Cash Management System with Lenders provides a secure, efficient, and transparent method for collecting borrower payments. It offers benefits such as enhanced security, streamlined cash flow, improved efficiency, and a reliable audit trail. Different types of agreements cater to specific needs and requirements of lenders.Queens New York Lock Box Agreement as Cash Management System with Lenders A Queens New York Lock Box Agreement is a cash management system commonly used by lenders in the lending industry. It is designed to ensure the secure and efficient handling of borrower payments. In this type of agreement, the borrower's payments, such as loan installments or rent payments, are directed to a designated mailing address in Queens, New York. These payments are collected by a third-party administrator known as a lock box bank. The lock box bank acts as an intermediary in the payment collection process. Once received, the lock box bank promptly processes the payments, often within a day or two. The funds are then deposited into a separate lock box account, which is typically held at a financial institution in Queens, New York. This segregated account ensures that the funds remain separate from the lender's operational accounts, promoting transparency and accountability. The Queens New York Lock Box Agreement offers several benefits for lenders: 1. Enhanced Security: By utilizing a lock box system, lenders can significantly reduce the risk of loss or theft associated with traditional payment collection methods, such as checks being lost in the mail or mishandled. 2. Streamlined Cash Flow: The lock box bank's prompt processing of payments ensures a consistent and reliable cash flow for the lender. This is particularly important for lenders who rely on a steady stream of payments to maintain their operations. 3. Improved Efficiency: The lock box system eliminates the need for lenders to manually process and deposit payments, saving valuable time and resources. This allows lenders to focus on other critical aspects of their operations. 4. Audit Trail: The use of a separate lock box account provides a clear and traceable record of all payment transactions, which can be crucial during audits or legal disputes. Different types of Queens New York Lock Box Agreements as Cash Management Systems with Lenders include: 1. Standard Lock Box Agreement: This is the most common type of lock box agreement where the lock box bank receives and processes all borrower payments. 2. Advanced Lock Box Agreement: In this type of agreement, the lock box bank not only collects and processes payments but also offers additional services such as electronic funds transfer (EFT) and online payment portals. 3. Sub-Lock Box Agreement: Sometimes lenders opt to establish multiple lock box accounts for specific types of loans or borrowers. This allows for more customized management and tracking of payments. In conclusion, a Queens New York Lock Box Agreement as a Cash Management System with Lenders provides a secure, efficient, and transparent method for collecting borrower payments. It offers benefits such as enhanced security, streamlined cash flow, improved efficiency, and a reliable audit trail. Different types of agreements cater to specific needs and requirements of lenders.
