Are you aware of the benefits of accounts receivable automation? Conventionally, a bank lockbox has been used by organization Accounts Receivable departments to increase efficiency.
Lockboxes have been around for a while now and much of the conventional bank lockbox's lifespan has been used for processing payment data associated with payments made by check. Mainstream offered this amenity to improve effectiveness and flow of company transactions streamlining the accounts receivables collection process.
Customers 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 customer. 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 usually a monthly fee along with a per line remittance data processing fee. To process a large amount of checks over time can be costly with a lockbox.
Today, we see a drastic shift with Accounts Payable Departments paying electronically. This change to ePayments has revolutionized the FinTech business with {solutions| designed with the goal of decreasing business costs of processing incoming payments.
Drawbacks of a Traditional Bank Lockbox
The lockbox can be fairly costly . Banks commonlyearn a monthly rate along with a per line rate linked tohandling payment remittance detail .
Lockboxes can include security concerns . The traditional bank lockbox still takes a decent level of manual re-keying information . 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 details from the lockbox provides all vital components to produce a fraudulent check .
Lockboxes don’t connect into your accounting program . Bank lockboxes process your payments and remittance information and thensend you the information . Your personnel still must input that information into your ERP to clear the cash .
Traditional Bank Lockboxes Are Causing a predicament for your Customers' AP Department . Businesses are modernizing their AP Department to eliminate manual process and preferring 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 assistthose companies in a cost click here effective scalable solution for automating Accounts Receivable .
Benefits of a FinTech Lockbox
Reduced Cost
The primary objective of the FinTech Lockbox would be to lowercost per transaction and produce an Accounts Receivable automation application to allowbusinesses to rapidly clear cash and improve access to 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 get payment information . The AR Lockbox gives you one place to house ALL your incoming electronic payments produced for faster cash application .
Removes 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 here B2B payments electronically , mail float is quickly becoming a thingof the past . The rise in 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 .