Businesses are paying big bucks to have check payments processed by bank lockbox operations, according to a recent survey by SunGard. Of the 101 companies surveyed, 27% pay $10,000 or more a month for lockbox processing. Among the companies with $1 billion or more in annual revenue, 24% say their lockbox costs total $30,000 or more a month.

A lockbox credits checks to the company's account, keys in certain information and then sends that data to the company along with images of the checks. But that's only part of the process. Companies employ a sizable number of people to link the information keyed in by the lockbox with the invoices the company sent out, as well as to resolve errors. Companies with revenues of $1 billion or more have an average of 29.3 full time employees devoted to those tasks, which SunGard estimates results in costs of about $1.4 million a year.

Despite that spending, just 31% of the companies surveyed manage to post payments the day that they're received, and 28% say it takes them two or more days to post payments. SunGard also says data accuracy remains an issue and creates problems when companies attempt to match payments with invoices. It argues that the accuracy of payment data would improve if lockboxes digitally captured the check and remittance information, instead of keying it in manually.

Amid the buzz about electronic payments, Phoenix-Hecht, a financial services market research firm, notes that checks and the lockboxes that process them aren't going away any time soon. While consumers are making more payments electronically, checks still dominate in business to business transactions, says Lex Litton, senior vice president of operations at Phoenix-Hecht. “Most corporations of all sizes report the majority of their payments business to business are still being both initiated and received as checks.”

The cost of processing a lockbox item showed a fairly high increase this year, of a little over 6%, Litton says, but over the last three years, the cost of a lockbox item rose about 10%, in line with the median price increase.

See also: How technology innovations help boost availability and re-launch lockbox services.