Are you aware of 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 conventional bank lockbox's life has been utilized for processing payment data associated with payments made by check. Commercial banks offered this benefit to improve effectiveness and flow of company transactions simplifying the accounts receivables collection method.
Clients generally 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 helps with lowering the company’s Days Sales Outstanding (DSO). Banks get 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 clients A/R workforce and increases their efficiency. 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 huge shift with Accounts Payable Departments paying electronically. This shift to ePayments has revolutionized 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 can be fairly high priced . Banks typicallyearn a monthly fee in addition to a per line rate linked toprocessing payment remittance detail .
Lockboxes can contain security concerns . 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 workers who are a novice to the financial institution or an outsourced contractor . The information from the lockbox can provide all required elements to create a fraudulent check .
Lockboxes don’t connect into your accounting system . Bank lockboxes process the payments and remittance data thenforward you the information . Your organization still must enter get more info that information into your ERP to clear the cash .
Traditional Bank Lockboxes Are Causing problems for your Customers' AP Department . Companies are modernizing their AP Department to remove manual process and opting to pay their clients electronically via ACH , Credit Card or vCard . These preferred methods of ePayment are producing an increase in email remittance . FinTech solution businesses have bridged the gap to aidthose businesses in a cost efficient scalable option for automating Accounts Receivable .
Rewards of a FinTech Lockbox
Reduced Cost
The major objective of the FinTech Lockbox is to decreasefees per transaction and supply an Accounts Receivable automation program to helpcompanies get more info to QUICKLY clear cash and improve access to your working capital .
Easy payment trail
You can easily track incoming ePayments in one place. Rather than flipping through remittance emails or going to the vendor portal to download payment information . The AR Lockbox provides you with a single spot for a hold All of your incoming electronic payments produced for swifter cash application .
Gets rid of mail float
Mail float is a term for the time needed for a check to go from the payer to the payee by way of the postal service . With more info the increase in B2B payments electronically , mail float is quickly turning into a productof the past . The improvement in electronic payments embracing FinTech Lockboxes with a major focus on the price reduction and speed at which you clear cash and apply it to your working capital .