Do you know the advantages of accounts receivable automation? Conventionally, a bank lockbox has been used by business Accounts Receivable departments to increase expediency.
Lockboxes have been around for decades and much of the traditional bank lockbox's lifespan has been used for capturing payment data associated with payments made by check. Commercial banks provided this benefit to improve effectiveness and flow of company transactions streamlining 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 receive 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 customers A/R workforce and increases their productivity. 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 costly with a lockbox.
Today, we see a drastic change with Accounts Payable Departments paying electronically. This shift to ePayments has elevated the FinTech business with {solutions| designed with the goal of decreasing business costs of processing incoming payments.
Pitfalls of a Traditional Bank Lockbox
The lockbox is often relatively high priced . Banks typicallyacquire a monthly fee in addition to a per line rate connected tohandling payment remittance detail .
Lockboxes may include security concerns . The traditional bank lockbox still takes a fair amount of manual re-keying data . With the majority of manual data entry attendance being entry level-administrative staff who are new to the bank or an outsourced service provider . The details from the lockbox gives you all vital elements to create a fraudulent check .
Lockboxes don’t connect into get more info your accounting system . Bank lockboxes process your payments and remittance information and thenforward you the information . Your organization still must enter that information into your ERP to clear the cash .
Standard Bank Lockboxes Are Causing a predicament for your Customers' AP Department . Companies are modernizing their AP Department to eradicate manual task and deciding 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 companies have bridged the gap to aidthose corporations in a cost effective scalable solution for automating Accounts Receivable .
Advantages of a FinTech Lockbox
Reduced Cost
The main objective of the FinTech Lockbox is usually to reducecost per transaction and supply an Accounts Receivable automation application to allowbusinesses to QUICKLY clear cash and facilitate here use of your working capital .
Easy payment trail
You can easily track incoming ePayments from one location. Rather than flipping through remittance emails or going to the vendor portal to download and read payment information . The AR Lockbox gives you a single location to house ALL your incoming electronic payments meant for faster 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 rapidly becoming a thingof the past . here The increasing amount of electronic payments adopting FinTech Lockboxes with a significant focus on the rate reduction and speed at which you clear cash and apply it to your working capital .