Auto lockbox - Let’s connect with Bank

Posted on June 29th, 2007 by Sanjit Anand | Print This Post | Email This Post

Overview
Auto Lockbox is a service that commercial banks offer corporate customers to enable them to outsource their accounts receivable payment processing. Auto Lockbox eliminates manual data entry by automatically processing receipts that are sent directly to your bank. You can also use Auto Lockbox for historical data conversion. For example, you can use Auto Lockbox to transfer receipts from your previous accounting system into Receivables. Auto Lockbox ensures that the receipts are accurate and valid before transferring them into Receivables.

Benefit of auto lockbox

• Eliminates manual data entry
• Streamlines the application of receipt to outstanding transactions
• Effectively manages cash flow by reducing turnover for converting checks into cash

When can I use lockbox

• apply receipt to outstanding invoice
• import historical receipt data
• auto lockbox report , such as the post quick cash Execution Report, are a good tool to reconcile auto lockbox receipt with the bank transmission

What is inside the lockbox process

This consist of 3 steps process, viz

1. Import: During this step, Lockbox reads and formats the data from your bank file into interface table AR_PAYMENTS_INTERFACE_ALL using a SQL *Loader script.

2. Validation: The validation program checks data in this interface table for compatibility with Receivables. Once validated, the data is transferred into QuickCash tables (AR_INTERIM_CASH_RECEIPTS_ALL and AR_INTERIM_CASH_RCPT_LINES_ALL) . At this point, you can optionally query your receipts in the QuickCash window and change how they will be applied before submitting the final step, Post QuickCash.

3. Post QuickCash: This step applies the receipts and updates your customer’s balances.

Process Flow
Here is schematic data flow and process flow of lockbox process

Set Up
These are the Normal Set Required for Auto lockbox. This is part of AR Set up:

• Define Banks
  • Define Remittance Bank with Account use Internal where checks from customer are deposited.
• Define Receipt Class
  • Define a Receipt class to determine the required processing steps for receipts to which you assign payment methods with this class.
• Define Payment Methods
  • Define a payment method with all receipt accounts.
• Define Receipt Source
  • Define Receipt Batch Source and attach receipt class, payment method and remittance bank account information to the Receipt Source.
• Define Lockbox
  • Define Lockboxes to use the Receivables Autolockbox program.
• Define Transmission Format
  • Define the Transmission Format which Auto Lockbox uses when importing data into Receivables.
• Define AutoCash Rule Set
  • autocash rule sets determine how a quickcash receipt is applied to open debit items.
  • enter a sequence for automatiocally applying receipts
  • select one or more autocash rules for receipt application from the list of autocash Rule options
  • Define AutoCash Rule Sets to determine the sequence of rules that Post
  • QuickCash uses to update Customer’s account balances.
• Control file
  • Create a control file which is used by SQL * Loader to import the data into interface table and it is placed in the directory $AR_TOP/bin
• Data file
  • data are kept into directory $AR_TOP/bin