NEW YORK -- Five major banks have announced plans to operate a nationwide lockbox network, marking the first time such a cash management service will be provided jointly by a group of banks.
The move reflects a recent trend toward innovative applications of a technique used by corporations to improve cash flow.
Although other coast-to-coast networks for speeding the collection of mailed payments have been formed, they are operated either by individual banks or by alliances between banks and financial services companies.
The five institutions involved in the new network are the Bank of Boston; Centerre Bank, St. Louis; Philadelphia National Bank; RepublicBank, Dallas; and Security Pacific National Bank, Los Angeles. They will operate lockboxes in Boston, St Louis, Philadelphia, Dallas, and Los Angeles, respectively.
Corporate customers, working with one of the banks, will be able to open lockboxes in any or all of the sites. Such a product is likely to be especially attractive to companies that receive remittances from several regions.
The network, tentatively called Imagenet, is scheduled to start operating in November, Frederick T. Sauer, a senior vice president of RepublicBank, said in a telephone interview. Chicago and Atlanta, two popular sites for lockboxes, are not included in the network, Mr. Sauer said, but banks in those cities as well as others are expected to be added later.
The concept behind lockboxes is simple: Instead of having remittances mailed to its headquarters, a corporation instructs its customers to send payments to a post office box, which is also called a lockbox. Bank employees empty the box several times a day, depositing checks and forwarding payment data to the corporation, which then gains use of the funds a few days sooner. By setting up lockboxes around the country, the length of time a check spends in the mail can be cut even more.
Although lockboxes have been used by corporations for almost 40 years, nationwide networks have popped up only in the last two years or so. Banks traditionally have offered the service only within the same state because of federal restrictions on the acceptance of interstate deposits. This has forced corporations wanting lockboxes in several cities to deal with several institutions.
Several Types of Lockbox Networks
Now several techniques have emerged to give companies access to a lockbox network through one bank. In one method, championed by the First National Bank of Chicago, a bank uses processing centers set up at the lockbox city and deposits checks with correspondent banks. …