Are you aware of the advantages of accounts receivable automation? Conventionally, a bank lockbox has been used by organization Accounts Receivable departments to increase expediency.
Lockboxes have been around for decades and a lot of the conventional bank lockbox's lifespan has been used for capturing payment data associated with payments made by check. Big offered this benefit to improve effectiveness and flow of business transactions simplifying the accounts receivables collection method.
Customers 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 data back to their client. Because banks are processing checks and remittance this decreases the clients A/R workforce and increases their productivity. The price of the bank lockbox is usually a monthly fee along with a per line remittance data processing cost. To process a large number of checks over time can be expensive with a lockbox.
Today, we see a drastic 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 often rather costly . Banks usuallyearn a monthly fee as well as a per line fee associated withprocessing payment remittance detail .
Lockboxes may include security concerns . The traditional bank lockbox still requires a decent measure of manual re-keying data . With the majority of manual data entry attendance being entry level-administrative personnel who are new to the bank or an outsourced service provider . The information from the lockbox can provide all vital components to generate 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 team still must input that information into your ERP to clear the cash .
Traditional Bank Lockboxes Are Creating problems for your Customers' AP Department . Businesses are modernizing their AP Department to eliminate manual task and preferring 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 companies have bridged the gap to supportthose organizations in an economical scalable solution for automating Accounts Receivable .
Advantages of a FinTech Lockbox
Reduced Cost
The major objective of the FinTech Lockbox is usually to decreasecost per transaction and provide an Accounts Receivable automation tool to allowbusinesses to QUICKLY clear cash and improve access to your working capital .
Trouble-free payment trail
You can easily track incoming ePayments in one place. Instead of flipping through remittance emails or going to the vendor portal to get payment data . The AR Lockbox gives you one destination to hold ALL your incoming electronic payments produced for speedier cash application .
Removes mail float
Mail float click here is a term for the time required for a check to go from the payer to the payee from the postal service . With the rise in B2B payments electronically , mail float is quickly turning into a thingof the past . The improvement in electronic payments embracing FinTech Lockboxes with an essential focus on the price reduction and speed at which you clear cash and apply it to your working capital .