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 many years and a lot of the traditional bank lockbox's lifespan has been used for capturing payment information associated with payments made by check. Commercial banks offered this amenity to improve effectiveness and flow of company transactions simplifying the accounts receivables collection process.
Customers generally 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 business’ 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 efficiency. The cost 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 pricey with a lockbox.
Today, we see a huge change with Accounts Payable Departments paying electronically. This change to ePayments has revolutionized the FinTech trade 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 high priced . Banks typicallyacquire a monthly fee along with a per line rate associated withprocessing payment remittance detail .
Lockboxes may contain security issues . The traditional bank lockbox still takes a decent level of manual re-keying data . With the majority of manual data entry attendance being entry level-administrative personnel who are a novice to the financial institution or an click here outsourced service provider . The data from the lockbox provides all essential components to produce a fraudulent check .
Lockboxes don’t connect into your accounting program . Bank lockboxes process the payments and remittance information and thensend you the information . Your personnel still must input that information into your ERP to clear the cash .
Standard Bank Lockboxes Are Causing a predicament for your Customers' AP Department . Corporations are modernizing their AP Department to eliminate manual process and preferring to pay their customers electronically via ACH , Credit Card or vCard . These preferred methods of ePayment are generating an increase in email remittance . FinTech solution companies have bridged the gap to servethose businesses in a cost effective scalable solution for automating Accounts Receivable .
Rewards of a FinTech Lockbox
Reduction Cost
The get more info primary objective of the FinTech Lockbox will be to lowerpricing per transaction and supply an Accounts Receivable automation application to permitcompanies to rapidly clear cash and facilitate access to your working capital .
Trouble-free 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 information . The AR Lockbox gives you a single destination to house All of your incoming electronic payments meant for speedier cash application .
Removes mail float
Mail float is a term for the time required for a check to go from the payer to the payee by means of the postal service . With the increase in B2B payments electronically , mail float is rapidly becoming a productof the past . The rise in electronic payments adopting FinTech Lockboxes with a major focus website on the cost reduction and speed in which you clear cash and apply it to your working capital .