Do you know the benefits 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 lifespan has been used for capturing payment data associated with payments made by check. Commercial banks offered this benefit to improve effectiveness and flow of business transactions simplifying the accounts receivables collection method.
Clients basically leverage 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 assists 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 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 shift to ePayments has elevated the FinTech trade with {solutions| designed with the goal of decreasing business costs of processing incoming payments.
Shortcomings of a Traditional Bank Lockbox
The lockbox is often rather high priced . Banks normallyacquire a monthly fee as well as a per line fee connected tohandling payment remittance detail .
Lockboxes may include security issues . 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 workers who are a novice to the bank or an outsourced service provider . The data from the lockbox gives you all needed elements to generate a fraudulent check .
Lockboxes don’t tie into your accounting system . Bank lockboxes process your payments and remittance data thenforward you the information . Your personnel still must enter that read more information into your ERP to clear the cash .
Financial Institution Lockboxes Are Causing a Problem for your Customers' AP Department . Businesses are modernizing their AP Department to get rid of 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 an economical scalable solution for automating Accounts Receivable .
Benefits of a FinTech Lockbox
Reduction Cost
The main goal of the FinTech Lockbox is to decreasepricing per transaction and provide an Accounts Receivable automation tool to alloworganizations 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. Instead of flipping through remittance emails or heading to the vendor portal to download payment information . The AR Lockbox provides you with one spot for a hold ALL 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 from the postal service . With the increase in B2B payments electronically , mail float is rapidly becoming a productof the past . The increasing amount of electronic payments adopting FinTech Lockboxes with a major focus on the fee reduction and speed in which you clear cash and apply it to your working capital .