Which of the following is true of a lockbox?

A) It is simply a box allocated to employees for keeping their valuables.
B) It is simply an address for receiving payments.
C) It is a box used to maintain transaction balances.
D) It is a financial instrument used to pay off loans.
E) It is a financial instrument used to manage long-term assets.

A lockbox is a service offered by banks to companies for the receipt of payment from customers. Under the service, the payments made by customers are directed to a special post office box, rather than going to the company. The bank goes to the box, retrieves the payments, processes them and deposits the funds directly into the company's bank account. This speeds up the collection and processing of account receivables by having the bank directly receive and deposit checks, reducing the time it takes for checks to clear and improving cash flow for the company.