Do you know 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 decades and a lot of the conventional bank lockbox's lifespan has been utilized for processing payment information associated with payments made by check. Commercial banks provided this service to improve effectiveness and flow of business transactions simplifying the accounts receivables collection method.
Clients generally leverage 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 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 cost of the bank lockbox is usually a monthly fee along with a per line remittance data processing fee. To process a large amount of checks over time can be costly with a lockbox.
Today, we see a huge 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.
Shortcomings of a Traditional Bank Lockbox
The lockbox is usually fairly high priced . Banks normallyearn a monthly fee as well as a per line rate related tohandling payment check here remittance detail .
Lockboxes can include security issues . The traditional bank lockbox still requires a fair measure of manual re-keying information . With the majority of manual data entry attendance being entry level-administrative workers who are new to the bank or an outsourced service provider . The data from the lockbox can provide all crucial elements to generate a fraudulent check .
Lockboxes don’t connect into your accounting system . Bank lockboxes process your payments and here remittance data and thenforward you the information . Your personnel still must enter that data into your ERP to clear the cash .
Standard Bank Lockboxes Are Causing problems for your Customers' AP Department . Organizations are modernizing their AP Department to eradicate manual process and preferring 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 businesses have bridged the gap to servethose businesses in a cost effective scalable option for automating Accounts Receivable .
Benefits of a FinTech Lockbox
Reduction Cost
The primary goal of the FinTech Lockbox is to lowerfees per transaction and provide an Accounts Receivable automation application to allowbusinesses to rapidly clear cash and improve access to your working capital .
Trouble-free payment trail
It is simple to track incoming ePayments from one here location. Rather than flipping through remittance emails or going to the vendor portal to download and read payment information . The AR Lockbox gives you one spot for a hold All of your incoming electronic payments created for swifter cash application .
Eliminates mail float
Mail float is a term for the time required for a check to travel from the payer to the payee from the postal service . With the rise in B2B payments electronically , mail float is swiftly turning into a thingof the past . The increase in 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 .