Lockbox

In receivables lending the lender's exposure is that money arrives, gets spent, and never reaches them. A lockbox removes the opportunity: customers are instructed to remit to a post office box or account the lender controls, and the lender applies the funds before releasing any surplus.

Variants, which differ in control

• True lockbox: a bank-operated address and account in the lender's or factor's name. Payments never touch the borrower's accounts. Standard in factoring after a notice of assignment
• Blocked account with a DACA: the account is in the borrower's name at their own bank, but a deposit account control agreement gives the lender the right to direct funds. Under a springing DACA the lender's control activates on a trigger; under a full-control version the sweep runs continuously
• Dominion of funds: all collections sweep daily to reduce the facility, and the borrower funds operations by drawing back down

The accounting side

Under full dominion, every dollar collected pays down the line and every dollar spent is a new draw. This has real consequences beyond mechanics: it affects how the facility is classified, it means interest is calculated on a balance that moves daily, and it means the borrower's access to its own revenue is mediated by the lender's willingness to fund the next draw.

Control and priority

A deposit account control agreement also perfects a security interest in the deposit account by control, which outranks a competing blanket UCC filing on that cash. This is why a bank with a DACA sits ahead of an earlier-filed general lien on the funds in that account.