The lockbox procedure is a system mainly used in the USA to accelerate payment receipt and check processing. The bank keys data from the checks sent by customers and notifies the payee of the entered information via file transfer. The record layout in the lockbox file must correspond to the standard BAI or BAI2 formats. The bank will transmit to the payee the data medium with relevant information about the checks received once a day or sometimes several times a day. This information can range from simply amounts per check (BAI) to more complex payment and deduction amounts per document paid (BAI2). The SAP System stores this payment information in the form of a Payment Advice which is used to clear subledger open items. The lockbox continues processing by generating automatic postings for both the general ledger and accounts receivable via call transactions. Checks that cannot be fully applied must be corrected using the Post-process function.

Two reports, the Lockbox Posting Log and the Log of Imported Checks, are produced during the program run.

The advantages of the lockbox service to you, the payee, are the following:

• Better control of customer check float time.

• Accelerated collection, deposit and credit memo of checks benefits the payee because you can earn a return on the early collection of cash.

• The automated lockbox system can reduce your own internal processing costs by automatically updating your cash postings and cash application to the subledger.

The following topics describe the steps required in lockbox processing. There are three general steps to the process:

1. Receipt of a file of check data from the bank. This can be transmitted by the bank, or some banks allow clients to dial in and download the files.
2. Execute the Lockbox Import program (RFEBLB00). This is normally executed overnight in background mode, although it can be run online.
3. Access the Lockbox Post-Process (FLB1) to process any checks that could not be applied in full by the batch program.