Do you know the advantages of accounts receivable automation? Conventionally, a bank lockbox has been used by company Accounts Receivable departments to increase efficiency.
Lockboxes have been around for many years 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 benefit to improve effectiveness and flow of business transactions streamlining the accounts receivables collection process.
Clients generally leverage the bank lockbox to receive check payments in one consistent location.
Bank lockboxes are strategically placed in a central location to decrease mail delivery time, which also assists with lowering the company’s 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 clients A/R workforce and increases their productivity. The price of the bank lockbox is typically a monthly cost along with a per line remittance data processing cost. To process a large number of checks over time can be costly with a lockbox.
Today, we see a drastic change with Accounts Payable Departments paying electronically. This change 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 often relatively expensive . Banks typicallyearn a monthly rate as well as a per line fee connected tohandling payment remittance detail .
Lockboxes can contain security concerns . The standard bank lockbox still takes a decent amount of manual re-keying data . With the majority of manual data entry attendance being entry level-administrative personnel who are a novice to the financial institution or an outsourced service provider . The information from the lockbox gives you all necessary components to produce a fraudulent read more check .
Lockboxes don’t tie into your accounting system . Bank lockboxes process your payments and remittance data and thensend you the information . Your organization still must key in that information into your ERP to clear the cash .
Commercial Bank Lockboxes Are Causing problems for your Customers' AP Department . Organizations are modernizing their AP Department to eradicate manual task and opting to pay their clients electronically via ACH , Credit Card or vCard . These preferred methods of ePayment are producing an increase in email remittance . website FinTech solution companies have bridged the gap to aidthose firms in a cost effective scalable solution for automating Accounts Receivable .
Benefits of a FinTech Lockbox
Reduced Cost
The primary goal of the FinTech Lockbox is to lowerfees per transaction and provide an Accounts Receivable automation tool to helpbusinesses to QUICKLY clear cash and facilitate access to your working capital .
Trouble-free payment trail
It is simple to track incoming ePayments in one location. Rather than flipping through remittance emails or heading to the vendor portal to download payment information . The AR Lockbox gives you a single location to house All of your incoming electronic payments produced for quicker cash application .
Gets rid of mail float
Mail float is a term for the time needed for a check to go from the payer to the payee by way of the postal service . With the rise in B2B payments electronically , mail float is swiftly becoming a productof the past . The increasing amount of electronic payments embracing FinTech Lockboxes with a primary focus on the fee reduction and speed in which you clear cash and apply it to your working capital .