Do you know the benefits of accounts receivable automation? Traditionally, a bank lockbox has been used by company Accounts Receivable departments to increase expediency.
Lockboxes have been around for many years and much of the conventional bank lockbox's lifespan has been utilized for processing payment data associated with payments made by check. Commercial banks offered this benefit to improve effectiveness and flow of business transactions streamlining the accounts receivables collection method.
Customers generally leverage the bank lockbox to receive check payments in one consistent location.
Bank lockboxes are strategically placed in a central location to decrease 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 customers A/R workforce and increases their productivity. The cost of the bank lockbox is usually a monthly cost along with a per line remittance data processing fee. To process a large amount of checks over time can be expensive 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.
Weaknesses of a Traditional Bank Lockbox
The lockbox is usually relatively costly . Banks commonlyacquire a monthly fee in addition to a per line rate linked toprocessing payment remittance detail .
Lockboxes can contain security concerns . The standard bank lockbox still takes a decent measure of manual re-keying information . With the majority of manual data entry attendance being entry level-administrative employees who are new to the bank or an outsourced contractor . The information from the lockbox gives you all essential elements to make a fraudulent check .
Lockboxes don’t connect into your accounting program . Bank lockboxes process the payments and remittance information thensend you the information . Your personnel still must input that data 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 popular methods of ePayment are generating an increase in email remittance . FinTech solution businesses have bridged more info the gap to supportthose corporations in an economical scalable option for automating Accounts Receivable .
Pros of a FinTech Lockbox
Reduced Cost
The main goal of the FinTech Lockbox will be to lowerfees per transaction and provide an Accounts Receivable automation program to read more letbusinesses to QUICKLY clear cash and improve use of your working capital .
Trouble-free payment trail
It is easy to track incoming ePayments from one place. Rather than flipping through remittance emails or going to the vendor portal to download and read payment data . The AR Lockbox gives you a single spot for a house All of your incoming electronic payments produced for more rapid 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 from the postal service . With the rise in B2B payments electronically get more info , mail float is swiftly becoming a thingof the past . The improvement in electronic payments adopting FinTech Lockboxes with a significant focus on the price reduction and speed at which you clear cash and apply it to your working capital .