Do you know the advantages of accounts receivable automation? Conventionally, a bank lockbox has been used by organization Accounts Receivable departments to increase expediency.
Lockboxes have been around for a while now and much of the traditional bank lockbox's lifespan has been utilized for processing payment information associated with payments made by check. Mainstream offered this benefit to improve effectiveness and flow of company transactions simplifying the accounts receivables collection method.
Clients generally use the bank lockbox to receive check payments in one consistent location.
Bank lockboxes are strategically placed in a central location to reduce mail delivery time, which also assists with lowering the business’ Days Sales Outstanding (DSO). Banks receive the paper check, process it along with the remittance data and send the information back to their customer. Because banks are processing checks and remittance this decreases the customers A/R workforce and increases their productivity. The price of the bank lockbox is usually a monthly cost along with a per line remittance data processing fee. To process a huge number of checks over time can be expensive with a lockbox.
Today, we see a drastic change with Accounts Payable Departments paying electronically. This shift to ePayments has elevated the FinTech business with {solutions| designed with the goal of decreasing business costs of processing incoming payments.
Downsides of a Traditional Bank Lockbox
The lockbox is usually somewhat high priced . Banks commonlyacquire a monthly rate along with a per line fee connected tohandling payment remittance detail .
Lockboxes can contain security issues . The traditional bank lockbox still requires a fair level of manual re-keying data . With the majority of manual data entry attendance being entry level-administrative workers who are a novice to the financial institution or an outsourced contractor . The information from the lockbox can provide all needed elements read more to produce a fraudulent check .
Lockboxes don’t connect into your accounting system . Bank lockboxes process the payments and remittance information thensend you the information . Your team still must input that data into your ERP to clear the cash ar automation solutions .
Traditional Bank Lockboxes Are Causing problems for your Customers' AP Department . Companies are modernizing their AP Department to eradicate manual process and deciding to pay their customers electronically via ACH , Credit Card or vCard . These preferred methods of ePayment are producing an increase in email remittance . FinTech solution companies have bridged the gap to assistthose businesses in an economical scalable solution for automating Accounts Receivable .
Benefits of a FinTech Lockbox
Reduction Cost
The major objective of the FinTech Lockbox is usually to lowercost per transaction and supply an Accounts Receivable automation program to allowbusinesses to rapidly clear cash and facilitate use of your working capital .
Trouble-free payment trail
You can easily track incoming ePayments in one place. Rather than flipping through remittance emails or going to the vendor portal to get payment data . The AR Lockbox gives you one destination to house ALL your incoming electronic payments produced for faster cash application .
Eliminates mail float
Mail float is a term for the time needed for a check to go from the payer to the payee through the postal service . With the rise in B2B payments electronically , mail float is swiftly becoming a productof the past . The rise in electronic payments using FinTech Lockboxes with an essential focus on the cost reduction and speed in which you clear cash and apply it to your working capital .