Do you know the advantages of accounts receivable automation? Traditionally, a bank lockbox has been used by business Accounts Receivable departments to increase efficiency.
Lockboxes have been around for decades and much of the conventional bank lockbox's life has been used for processing payment data associated with payments made by check. Commercial banks provided this amenity to improve effectiveness and flow of business transactions streamlining the accounts receivables collection process.
Customers basically 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 company’s 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 clients A/R workforce and increases their efficiency. The cost 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 expensive with a lockbox.
Today, we see a drastic shift with Accounts Payable Departments paying electronically. This shift to ePayments has revolutionized the FinTech industry with {solutions| designed with the goal of decreasing business costs of processing incoming payments.
Weaknesses of a Traditional Bank Lockbox
The lockbox often is fairly expensive . Banks normallyearn a monthly rate along with a per line fee associated withprocessing payment remittance detail .
Lockboxes may include security concerns . The traditional bank lockbox still requires a fair amount of manual re-keying information . With the majority of manual data entry attendance being entry level-administrative personnel who are new to the bank or an outsourced contractor . The information from the lockbox can provide all needed elements to generate a fraudulent check .
Lockboxes read more don’t tie into your accounting system . Bank lockboxes process the payments and remittance information thensend you the information . Your organization still must key in that information into your ERP to clear the cash .
Commercial Bank Lockboxes Are Creating a predicament for your Customers' AP Department . Organizations are modernizing their AP Department to get rid of manual process and opting to pay their customers electronically via ACH , Credit Card or vCard . These popular methods of ePayment are creating an increase in email remittance . FinTech solution businesses have bridged the gap to servethose firms in a cost efficient scalable option for automating Accounts Receivable .
Advantages of a FinTech Lockbox
Reduction Cost
The major objective of the FinTech Lockbox would be to lowercost per transaction and supply an Accounts Receivable automation program to permitorganizations to QUICKLY clear cash and facilitate access to your working capital .
Simple payment trail
It is easy to track incoming ePayments in one location. Rather than flipping through remittance emails or heading to the vendor portal to download and read payment data . The AR Lockbox gives you one here destination to house ALL your incoming electronic payments ar automation solutions meant for speedier cash application .
Gets rid of mail float
Mail float is a term for the time needed 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 increasing amount of electronic payments choosing FinTech Lockboxes with a primary focus on the rate reduction and speed at which you clear cash and apply it to your working capital .