Editor’s Note: This article has been updated from its original publication in August 2018.
Many organizations still receive a meaningful portion of their payments by check. While digital payments continue to grow, paper checks remain common across many industries, including utilities, property management, healthcare, and municipalities.
The numbers reinforce this reality:
For finance and operations teams, that means check processing remains an important part of the receivables workflow.
The challenge is that traditional check handling can create operational friction. Manual processing, delayed deposits, and limited visibility into incoming payments can slow down receivables operations and consume valuable staff time.
Lockbox services were designed to address these challenges by digitizing incoming checks and remittance data, accelerating access to payment information, and simplifying payment workflows. Today, organizations also have more flexibility in how they deploy lockbox capabilities depending on their operational needs and internal resources.
In this article, we explore three flexible lockbox deployment models—full-service, hybrid, and SaaS—and how each approach helps organizations modernize check payment processing while improving efficiency and visibility. This is different from choosing between traditional, electronic, or remote lockbox solutions. Instead, it focuses on how organizations can operationalize lockbox processing based on their preferred mix of outsourcing, internal involvement, and control.
A full-service lockbox is a fully outsourced model in which the lockbox provider manages the entire check processing workflow.
With this approach, organizations direct customer payments to a dedicated lockbox address managed by a lockbox provider. Mail is collected, opened, sorted, and processed at a secure lockbox facility where checks and remittance documents are scanned and digitized. Payment data and images are then delivered electronically for reconciliation, reporting, and posting.
Because the provider manages the entire workflow—from mail receipt through data capture—organizations can eliminate the operational burden of handling checks internally while gaining faster access to payment information.
Key advantages:
Full-service lockbox is often the right fit for organizations that want to fully outsource check processing operations while improving visibility into incoming payments.
A hybrid lockbox model allows organizations to share certain parts of the check processing workflow with their lockbox provider.
In this approach, responsibilities are divided between the organization and the provider based on operational preferences. For example, an organization may manage the courier service that collects mail and delivers it to a processing facility, while the lockbox provider handles the specialized processing work—opening mail, sorting payments, capturing check and remittance images, and digitizing payment data.
This model allows organizations to maintain involvement in parts of the workflow that make sense for their operations, while outsourcing the more labor-intensive aspects of payment processing.
Key advantages:
A hybrid lockbox model is well suited for organizations that want to retain a level of operational control while still benefiting from automated lockbox processing and digital receivables workflows.
A SaaS lockbox model brings lockbox functionality directly into an organization’s environment using hosted software.
Rather than fully outsourcing lockbox operations, this model supports organizations that want to manage processing in-house through configurable software, automation, and digital workflows. Teams can use the software to manage item processing, balance workloads, apply processing rules, route exceptions, and gain visibility into lockbox activity without taking on the complexity of building and maintaining a custom system from scratch.
This model allows organizations to maintain direct control over lockbox operations while still leveraging automated workflows and digital reporting tools.
Key advantages:
A SaaS model is often preferred by organizations that want to keep lockbox processing in-house while digitizing receivables operations through modern software tools.
Each lockbox deployment model offers a different balance of outsourcing, operational control, and internal involvement. The right approach depends on payment volume, internal resources, and how much of the check processing workflow an organization wants to manage.
| Lockbox Model | Who Handles Check Processing | Example Use Case |
| Full-Service | Provider manages the entire process, from mail receipt to digitization and reporting | Organizations that want to fully outsource check processing and eliminate internal mailroom operations |
| Hybrid | Organization and provider share responsibilities | Organizations that want to retain involvement in certain steps while outsourcing labor-intensive processing |
| SaaS | Organization handles check processing using hosted software | Organizations that want to keep processing in-house while digitizing receivables workflows |
Whether you want to fully outsource processing, share responsibilities, or manage lockbox operations in-house through software, the right model depends on your environment.
For organizations evaluating the bigger strategic question of whether to build internally, buy software, or partner with a specialist, we also explore that broader decision in Build, Buy, or Partner? Crafting the Right Approach to Managing Receivables. That article complements this one by looking at the broader receivables strategy behind these operational models.
If checks are still a meaningful share of your incoming payments, CheckAlt’s modern lockbox solution can help your organization simplify check payment processing by converting paper payments into secure, digital workflows. From full-service outsourcing to hybrid and SaaS deployment models, CheckAlt offers flexible options designed to support different operational structures and payment volumes.
If your organization is evaluating ways to modernize receivables processing, CheckAlt can help you identify the lockbox model that best fits your environment. Get in touch with us today to explore the approach that aligns with your workflow, staffing model, and payment volume. Also, be sure to follow us on LinkedIn and subscribe to CheckAlt Connect, our monthly email newsletter, to keep on top of the latest in payments