Do you know the benefits of accounts receivable automation? Conventionally, a bank lockbox has been used by business Accounts Receivable departments to increase efficiency.
Lockboxes have been around for decades and much of the traditional bank lockbox's lifespan has been used for capturing payment information associated with payments made by check. Mainstream provided this amenity to improve effectiveness and flow of company transactions simplifying the accounts receivables collection process.
Clients basically use 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 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 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 cost. To process a huge number of checks over time can be costly with a lockbox.
Today, we see a big change with Accounts Payable Departments paying electronically. This shift to ePayments has elevated 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 high priced . Banks generallyacquire a monthly rate as well as a per line rate connected tohandling payment remittance detail .
Lockboxes may include security issues . The standard bank lockbox still requires a fair amount of manual re-keying data . With the majority of manual data entry attendance being entry level-administrative employees who are new to the financial institution or an outsourced service provider . The details from the lockbox gives you all vital components to create a fraudulent check .
Lockboxes don’t tie into your accounting program . Bank lockboxes process your payments and remittance information and thenforward you the information . Your team still must key in more info that information into your ERP to clear the cash .
Traditional Bank Lockboxes Are Causing issues for your Customers' AP Department . Corporations are modernizing their AP Department to eradicate manual process and deciding to pay their customers electronically via ACH , Credit Card or vCard . These preferred methods of ePayment are producing an increase in email remittance . FinTech solution companies have bridged the gap to assistthose corporations in a cost efficient scalable option for automating Accounts Receivable .
Pros of a FinTech Lockbox
Reduced Cost
The major goal of the FinTech Lockbox will be to decreasepricing per transaction and provide an Accounts Receivable automation application to allowbusinesses to rapidly clear cash and improve use of your working capital .
Trouble-free payment trail
It is simple to track incoming ePayments from one location. Instead of flipping through remittance emails or heading to the vendor portal to download payment data . The AR Lockbox gives you more info one spot for a hold All of your incoming electronic payments created for swifter 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 by means of the postal service . With the rise in B2B payments electronically , mail float is swiftly turning into a thingof the past read more . The increasing amount of electronic payments using FinTech Lockboxes with a major focus on the rate reduction and speed in which you clear cash and apply it to your working capital .