Do you know the benefits of accounts receivable automation? Traditionally, a bank lockbox has been used by business Accounts Receivable departments to increase expediency.
Lockboxes have been around for decades and much of the conventional bank lockbox's life has been used for processing payment data associated with payments made by check. Mainstream provided this benefit to improve effectiveness and flow of company transactions streamlining the accounts receivables collection method.
Clients basically use 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 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 clients A/R workforce and increases their productivity. 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 big 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.
Drawbacks of a Traditional Bank Lockbox
The lockbox often is rather expensive . Banks generallyearn a monthly fee along with a per line fee related toprocessing payment remittance detail .
Lockboxes may include security concerns . The standard bank lockbox still requires a fair measure of manual re-keying information . With the majority of manual data entry attendance being entry level-administrative personnel who are new to the financial institution or an outsourced service provider . The data from the lockbox can provide all needed elements to make a fraudulent check .
Lockboxes don’t connect into your accounting program . Bank lockboxes process the payments and remittance data and thensend you the information . Your personnel still must input that data into your ERP to clear the cash .
Standard Bank Lockboxes Are Creating a Problem for your Customers' AP Department . Corporations are modernizing their AP Department to get rid of manual task and opting to pay their customers electronically via ACH , Credit Card or vCard . These preferred methods of ePayment are creating an increase in email remittance . FinTech solution businesses have bridged the gap to servethose firms in a cost efficient scalable alternative for click here automating Accounts Receivable .
Rewards of a FinTech Lockbox
Reduced Cost
The main goal of the FinTech Lockbox is to lowerfees per transaction and provide an Accounts Receivable automation program to permitcompanies to rapidly clear cash and improve use of your working capital .
Easy 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 get payment data . The AR Lockbox gives here you a single destination to house ALL your incoming electronic payments made for speedier cash application .
Eliminates mail float
Mail float is a term for the time needed for a check to travel from the payer to the payee by way of 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 embracing FinTech Lockboxes with a primary focus on the price reduction and speed in which you clear cash and apply it to your working capital .