Lockbox deposits

How lockbox batches arrive, how remittances are matched against open invoices, and what to do with an unidentified payment.

How-toFor Bookkeepers, Firm staff

What a lockbox is

A lockbox is a bank-operated mailbox where customers send payments. The bank opens the mail, deposits the checks, and sends back a file describing each payment and whatever remittance information came with it. It gets cash into the account faster than an in-house process and removes cheques from your office.

In Books, a lockbox batch arrives as a group of payments to be matched against open invoices — a deposit total that must fully account for itself before it posts.

Processing a batch

1
Open Lockbox Deposits and select the batch.
The batch shows the deposit total and each payment in it.
2
Review the proposed matches.
Payments carrying an invoice number match automatically. Payments where the amount exactly matches one open invoice usually do too.
3
Resolve the unmatched payments.
Find the customer, then apply the payment across their open invoices oldest first, unless the remittance says otherwise.
4
Handle short and over payments explicitly.
A short payment either leaves a balance open or needs a credit memo for the difference. An overpayment leaves a credit on the customer's account. Do not force either into a clean match.
5
Confirm the batch totals to the deposit.
The applied payments must sum to the deposit total. A batch that does not tie will not post.
6
Post the batch.

Unidentified payments

Some payments simply cannot be identified from the remittance. The correct treatment is to record them as unapplied cash against the customer if you know who paid, or in a suspense account if you do not, and then chase the identification.

In order of effort:

Check the check image for a memo line or an enclosed remittance stub.
Match the amount against open invoices across all customers — an exact amount is usually conclusive.
Look for a customer whose payment pattern matches the amount and timing.
Contact the customer. A payment you cannot apply is a payment you cannot credit them for.

Common questions

How does the lockbox deposit relate to the bank feed?

The bank feed will show the deposit as a single amount. That deposit should be matched to the posted lockbox batch, not coded to revenue — the revenue was recognized when the invoices were issued.

A customer paid several invoices with one check.

Apply the one payment across multiple invoices. That is the normal case, and the payment record keeps the split so each invoice's history is accurate.