Glossary · Trucking Finance
Lockbox.
Address or bank account designated for invoice payments where the factoring company receives broker payments directly, used to control collections.
What it is
A lockbox is a designated payment address (a PO Box) or bank account where broker payments are routed. In factoring, the factor sets up a lockbox — usually at the factor's bank — and the carrier instructs every broker to send payment to that address or account. Broker payments arrive directly at the factor (not the carrier); the factor then settles with the carrier, releasing reserves after fees and chargebacks are netted out.
Lockbox routing is required by most factoring contracts as a condition of advance. Without it, broker payments would land in the carrier's account, and the factor's UCC-1 lien on receivables couldn't be perfected operationally — the factor would have no control over the collateral it just advanced against. Some factors use a hybrid "verification + lockbox" structure where the carrier handles broker outreach but the factor verifies the broker before advancing and still routes the payment to the factor lockbox.
Why it matters for trucking finance
Lockbox arrangements are why some carriers feel "trapped" by factoring — the broker payment infrastructure must be reconfigured back to the carrier when leaving a factor (notification letters, broker re-keying remit-to addresses, sometimes 60–90 day overlap). ABL facilities sometimes require similar lockbox arrangements. Understanding lockbox routing is critical when evaluating factoring contracts; sloppy lockbox transitions are a leading cause of factor-switch friction and double-paid or lost invoices.
Related terms
- Recourse Factoring — Factoring arrangement where the carrier remains liable for unpaid invoices if the broker fails to pay; lower rates than non-recourse.
- ACH — Automated Clearing House — electronic bank transfer network used for direct deposit of factoring advances and most carrier-to-broker payments.
- UCC-1 — Uniform Commercial Code financing statement filed by a lender or factor to publicly establish a security interest in business assets.
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