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.
Santa Clara California Lock Box Agreement is a cash management system designed to facilitate financial transactions between borrowers and lenders. This agreement establishes a centralized depository for receiving borrower's payments, enabling lenders to efficiently manage and monitor their cash flows. Key Features: 1. Deposit Processing: Under the Santa Clara California Lock Box Agreement, borrowers are required to submit their payments directly to a designated lock box address. These payments are typically in the form of checks or electronic transfers. The lock box facility collects and processes these deposits promptly, allowing lenders to have immediate access to their funds. 2. Payment Verification: Each payment received through the lock box is carefully verified and reconciled to ensure accuracy. This involves comparing check amounts, verifying payee information, and confirming the availability of funds. Any discrepancies or exceptions are promptly addressed, minimizing the risk of fraud or errors. 3. Account Balancing: The lock box system keeps a detailed record of all payments received, allowing lenders to easily track their account balances. This information is crucial for cash forecasting and financial planning purposes. Lenders can obtain regular reports summarizing daily, weekly, or monthly deposit activity. 4. Funds Disbursement: Once payments are processed and verified by the lock box facility, funds are swiftly disbursed to lenders' designated accounts. This streamlined process ensures quick access to the received payments, allowing lenders to effectively manage their cash positions and meet their financial obligations. Types of Santa Clara California Lock Box Agreement: 1. Traditional Lock Box: A traditional lock box agreement requires borrowers to send their payments to a physical address where the lock box facility is located. Payments are collected, processed, and deposited manually by the lock box operator. 2. Electronic Lock Box: In this digital age, many lock box agreements have transitioned to electronic lock box systems. Borrowers can make payments electronically through secure online platforms or electronic funds transfers (Eats). These payments are automatically processed by the lock box facility, eliminating the need for manual intervention and expediting the overall process. In conclusion, the Santa Clara California Lock Box Agreement as a cash management system offers lenders a reliable and efficient way to manage their incoming payments. Whether using the traditional or electronic lock box approach, the agreement facilitates the timely processing, verification, and disbursement of funds, allowing lenders to effectively monitor and control their cash flows.Santa Clara California Lock Box Agreement is a cash management system designed to facilitate financial transactions between borrowers and lenders. This agreement establishes a centralized depository for receiving borrower's payments, enabling lenders to efficiently manage and monitor their cash flows. Key Features: 1. Deposit Processing: Under the Santa Clara California Lock Box Agreement, borrowers are required to submit their payments directly to a designated lock box address. These payments are typically in the form of checks or electronic transfers. The lock box facility collects and processes these deposits promptly, allowing lenders to have immediate access to their funds. 2. Payment Verification: Each payment received through the lock box is carefully verified and reconciled to ensure accuracy. This involves comparing check amounts, verifying payee information, and confirming the availability of funds. Any discrepancies or exceptions are promptly addressed, minimizing the risk of fraud or errors. 3. Account Balancing: The lock box system keeps a detailed record of all payments received, allowing lenders to easily track their account balances. This information is crucial for cash forecasting and financial planning purposes. Lenders can obtain regular reports summarizing daily, weekly, or monthly deposit activity. 4. Funds Disbursement: Once payments are processed and verified by the lock box facility, funds are swiftly disbursed to lenders' designated accounts. This streamlined process ensures quick access to the received payments, allowing lenders to effectively manage their cash positions and meet their financial obligations. Types of Santa Clara California Lock Box Agreement: 1. Traditional Lock Box: A traditional lock box agreement requires borrowers to send their payments to a physical address where the lock box facility is located. Payments are collected, processed, and deposited manually by the lock box operator. 2. Electronic Lock Box: In this digital age, many lock box agreements have transitioned to electronic lock box systems. Borrowers can make payments electronically through secure online platforms or electronic funds transfers (Eats). These payments are automatically processed by the lock box facility, eliminating the need for manual intervention and expediting the overall process. In conclusion, the Santa Clara California Lock Box Agreement as a cash management system offers lenders a reliable and efficient way to manage their incoming payments. Whether using the traditional or electronic lock box approach, the agreement facilitates the timely processing, verification, and disbursement of funds, allowing lenders to effectively monitor and control their cash flows.
