Do you know the advantages of accounts receivable automation? Conventionally, a bank lockbox has been used by organization Accounts Receivable departments to increase efficiency.
Lockboxes have been around for a while now and a lot of the conventional bank lockbox's life has been utilized for capturing payment information associated with payments made by check. Mainstream offered this amenity to improve effectiveness and flow of company transactions simplifying the accounts receivables collection method.
Clients basically leverage the bank lockbox to receive check payments in one consistent location.
Bank lockboxes are purposefully 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 client. Because banks are processing checks and remittance this decreases the clients A/R workforce and increases their efficiency. The cost of the bank lockbox is typically a monthly fee along with a per line remittance data processing cost. To process a huge amount of checks over time can be expensive with a lockbox.
Today, we see a huge shift 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 rather costly . Banks typicallyacquire a monthly fee as well as a per line fee associated withhandling payment remittance detail .
Lockboxes can include security issues . The standard bank lockbox still requires a decent amount of manual re-keying data . With the majority of manual data entry attendance being entry level-administrative workers who are a novice to the bank or an outsourced service provider . The data from the lockbox provides all crucial components to create a fraudulent check .
Lockboxes don’t tie into your accounting program . Bank lockboxes process the payments and remittance information thenforward you the information . Your personnel still must enter that data into your ERP to clear the cash .
Commercial Bank Lockboxes Are Creating issues for your Customers' AP Department . Organizations are modernizing their AP Department to get rid of manual process and preferring to pay their clients electronically via ACH , Credit Card or vCard . These popular methods of ePayment are creating an increase in email remittance . FinTech solution companies have bridged the gap to aidthose firms in an economical scalable option for automating Accounts Receivable .
Advantages of a FinTech Lockbox
Reduction Cost
The major objective of the FinTech Lockbox will be to decreasecost per transaction and provide an Accounts Receivable automation program to helpbusinesses to rapidly clear cash and facilitate use of your working capital .
Simple payment trail
It is simple to track incoming ePayments in one place. Instead of flipping through remittance emails or heading to the vendor portal to get payment data . The AR Lockbox provides you with a single destination to hold ALL your incoming electronic payments made for more rapid 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 get more info by means of the postal service . With the rise in B2B payments electronically , mail float is quickly becoming a thingof the past accounts receivable solutions . The improvement in electronic payments embracing FinTech Lockboxes with a significant focus on the price reduction and speed in which you clear cash and apply it to your working capital .