Do you know the benefits of accounts receivable automation? Traditionally, a bank lockbox has been used by company Accounts Receivable departments to increase efficiency.
Lockboxes have been around for many years and much of the traditional bank lockbox's life has been used for capturing payment information associated with payments made by check. Commercial banks offered this amenity to improve effectiveness and flow of company transactions simplifying the accounts receivables collection method.
Customers basically 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 helps with lowering the business’ Days Sales Outstanding (DSO). Banks receive 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 clients A/R workforce and increases their productivity. The price of the bank lockbox is usually a monthly fee along with a per line remittance data processing fee. To process a huge number of checks over time can be costly with a lockbox.
Today, we see a huge shift with Accounts Payable Departments paying electronically. This shift to ePayments has revolutionized the FinTech trade with {solutions| designed with the goal of decreasing business costs of processing incoming payments.
Weaknesses of a Traditional Bank Lockbox
The lockbox could be rather expensive . Banks normallyearn a monthly rate as well as a per line rate associated withprocessing payment remittance detail .
Lockboxes can contain security concerns . The traditional bank lockbox still requires a decent measure of manual re-keying information . With the majority of manual data entry attendance being entry level-administrative staff who are a novice to the financial institution or an outsourced service provider . The details from the lockbox gives you all required elements to generate a fraudulent check .
Lockboxes don’t connect into your accounting system . read more Bank lockboxes process your payments and remittance data thensend you the information . Your personnel still must enter that information into your ERP to clear the cash .
Standard Bank Lockboxes Are Causing difficulty for your Customers' AP Department . Corporations are modernizing their AP Department to remove manual process and deciding to pay their clients electronically via ACH , Credit Card or vCard . These desired methods of ePayment are generating an increase in email remittance . FinTech solution companies have bridged the gap to assistthose businesses in an economical scalable alternative for automating Accounts Receivable .
Benefits of a FinTech Lockbox
Reduction Cost
The main goal of the FinTech Lockbox is to decreasepricing per transaction and provide an Accounts Receivable automation application to letorganizations to QUICKLY clear cash click here and improve access to your working capital .
Simple payment trail
It is easy to track incoming ePayments from one location. Instead of flipping through remittance emails or heading to the vendor portal to download and read payment information . The AR Lockbox provides you with a single place to house ALL your incoming electronic payments made for more rapid cash application .
Removes mail float
Mail float is a term for the time needed for a check to travel from the payer to the payee by means of the postal service . With the increase in B2B payments electronically , mail float is quickly becoming a thingof the past . The increase in electronic payments adopting FinTech Lockboxes with a primary focus on the rate reduction and speed in which you clear cash and apply it to your working capital .