Do you know the advantages of accounts receivable automation? Conventionally, a bank lockbox has been used by company Accounts Receivable departments to increase expediency.
Lockboxes have been around for a while now and a lot of the traditional bank lockbox's life has been used for capturing payment information associated with payments made by check. Commercial banks provided this amenity to improve effectiveness and flow of company transactions simplifying 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 decrease 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 information 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 pricey with a lockbox.
Today, we see a big change 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.
Pitfalls of a Traditional Bank Lockbox
The lockbox often is rather costly . Banks generallyearn a monthly fee in addition to a per line fee linked toprocessing payment remittance detail .
Lockboxes can contain security concerns . 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 staff who are a novice to the financial institution or an outsourced contractor . The information from the lockbox gives you all vital elements to produce a fraudulent check .
Lockboxes don’t tie into your accounting system . Bank lockboxes process your payments and remittance information thenforward you the information . Your organization still must enter that data into your ERP to clear the cash .
Financial Institution Lockboxes Are Creating difficulty for your accounts receivable solutions Customers' AP Department . Businesses are modernizing their AP Department to remove manual task and preferring 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 aidthose corporations in a cost effective scalable solution for automating Accounts Receivable .
Rewards of a FinTech Lockbox
Reduced Cost
The primary objective of the FinTech Lockbox is usually to reducecost per transaction and supply an Accounts Receivable automation program to helpbusinesses to QUICKLY clear cash and improve use of your working capital .
Simple payment trail
You can easily track incoming ePayments in one location. Rather than flipping through remittance emails or heading to the vendor portal to get payment data . The AR Lockbox provides you with a single location to hold All of your incoming electronic payments created for faster cash application accounts receivable solutions .
Gets rid of mail float
Mail float is a term for the time required for a check to go from the payer to the payee by way of the postal service . With the increase in B2B payments electronically , mail float is rapidly turning into a productof the past . The increase in electronic payments adopting FinTech Lockboxes with an essential focus on the fee reduction and speed in which you clear cash and apply it to your working capital .