Are you aware of the advantages of accounts receivable automation? Traditionally, a bank lockbox has been used by company Accounts Receivable departments to increase efficiency.
Lockboxes have been around for a while now and a lot of the conventional bank lockbox's lifespan has been utilized for processing payment data associated with payments made by check. Big provided this amenity to improve effectiveness and flow of company transactions streamlining the accounts receivables collection process.
Clients generally use the bank lockbox to receive check payments in one consistent location.
Bank lockboxes are purposefully placed in a central location to reduce mail delivery time, which also assists with lowering the business’ Days Sales Outstanding (DSO). Banks get the paper check, process it along with the remittance data and send the data back to their customer. Because banks are processing checks and remittance this decreases the customers A/R workforce and increases their efficiency. The cost of the bank lockbox is usually a monthly fee along with a per line remittance data processing cost. To process a large amount of checks over time can be pricey with a lockbox.
Today, we see a huge change with Accounts Payable Departments paying electronically. This change to ePayments has elevated the FinTech industry with {solutions| designed with the goal of decreasing business costs of processing incoming payments.
Downsides of a Traditional Bank Lockbox
The lockbox can be fairly high priced . Banks generallyacquire a monthly rate as well as a per line fee related toprocessing payment remittance detail .
Lockboxes may include security concerns . The traditional bank lockbox still requires a decent level of manual re-keying information . With the majority of manual data entry attendance being entry level-administrative staff who are new to the bank or an outsourced service provider . The details from the lockbox gives you all essential components to create a fraudulent check .
Lockboxes don’t connect into your accounting system . Bank lockboxes process your payments and remittance information and thenforward you the information . Your organization still must input that data into your ERP to clear the cash .
Commercial Bank Lockboxes Are Creating issues for your Customers' AP Department . Businesses are modernizing their AP Department to get rid of manual task and deciding to pay their customers electronically via ACH , Credit Card or vCard . These preferred methods of ePayment are generating an increase in email remittance . FinTech solution companies have bridged the gap to assistthose corporations in a cost efficient scalable solution for automating Accounts Receivable .
Advantages of a FinTech Lockbox
Reduction Cost
The main goal of the FinTech Lockbox is usually to decreasecost per transaction and supply an Accounts Receivable automation tool to letcompanies to QUICKLY clear cash and facilitate access to your working capital .
Trouble-free payment trail
It is simple to track incoming ePayments from one location. Rather than flipping through remittance emails or heading to the vendor portal to download and read payment information . The AR Lockbox gives you one destination to hold All of your incoming electronic payments made for speedier cash application .
Gets rid of mail float
Mail float is ar automation solutions a term for the time required for a check to travel from the payer to the payee by way of the postal service . With the increase in B2B payments electronically , mail float is quickly becoming a thingof the past . The increasing amount of electronic payments using FinTech Lockboxes with a major focus on the rate reduction and speed in which you clear cash and apply it to your working capital .