Do you know the benefits of accounts receivable automation? Conventionally, a bank lockbox has been used by organization Accounts Receivable departments to increase expediency.
Lockboxes have been around for decades and a lot of the traditional bank lockbox's life has been utilized for processing payment information associated with payments made by check. Mainstream provided this amenity to improve effectiveness and flow of company transactions streamlining the accounts receivables collection method.
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 helps with lowering the company’s Days Sales Outstanding (DSO). Banks receive 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 customers A/R workforce and increases their productivity. The price of the bank lockbox is usually a monthly fee along with a per line remittance data processing fee. To process a huge amount of checks over time can be costly with a lockbox.
Today, we see a huge shift with Accounts Payable Departments paying electronically. This change 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 could be rather expensive . Banks usuallyacquire a monthly rate as well as a per line fee associated withhandling check here payment remittance detail .
Lockboxes may include 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 bank or an outsourced contractor . The data from the lockbox gives you all vital elements to create a fraudulent check .
Lockboxes don’t tie into your accounting program . Bank lockboxes process the payments and remittance data thenforward you the information . Your team still must key in that data into your ERP to clear the cash .
Standard Bank Lockboxes Are Creating difficulty for your Customers' AP Department . Businesses are modernizing their AP Department to remove manual task and deciding to pay accounts receivable automation their customers electronically via ACH , Credit Card or vCard . These desired methods of ePayment are generating an increase in email remittance . FinTech solution companies have bridged the gap to helpthose corporations in a cost efficient scalable alternative for automating Accounts Receivable .
Benefits of a FinTech Lockbox
Reduced Cost
The primary more info objective of the FinTech Lockbox would be to decreasepricing per transaction and produce an Accounts Receivable automation application to allowcompanies to rapidly clear cash and improve use of your working capital .
Trouble-free payment trail
It is easy to track incoming ePayments from one place. Rather than flipping through remittance emails or heading to the vendor portal to get payment data . The AR Lockbox provides you with one location to house ALL your incoming electronic payments meant for faster cash application .
Removes mail float
Mail float is a term for the time needed for a check to travel from the payer to the payee via the postal service . With the rise in B2B payments electronically , mail float is swiftly becoming a thingof the past . The increase in electronic payments adopting FinTech Lockboxes with a major focus on the cost reduction and speed in which you clear cash and apply it to your working capital .