Are you familiar with the advantages of accounts receivable automation? Conventionally, a bank lockbox has been used by company Accounts Receivable departments to increase efficiency.
Lockboxes have been around for decades and a lot of the conventional bank lockbox's life has been used for capturing payment data associated with payments made by check. Commercial banks provided this benefit to improve effectiveness and flow of business transactions streamlining the accounts receivables collection method.
Clients basically leverage the bank lockbox to receive check payments in one consistent location.
Bank lockboxes are purposefully 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 information 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 cost. To process a large number of checks over time can be pricey with a lockbox.
Today, we see a drastic 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.
Downsides of a Traditional Bank Lockbox
The lockbox could be relatively expensive . Banks typicallyearn a monthly rate as well as a per line rate related tohandling payment remittance detail .
Lockboxes may include security concerns . The traditional bank lockbox still takes a decent amount of manual re-keying information . 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 data from the lockbox gives you all required elements to produce a fraudulent check .
Lockboxes don’t tie into your accounting program . Bank lockboxes process your payments and remittance information and thenforward you the information . Your organization still must input that data into your ERP to clear the cash .
Standard Bank Lockboxes Are Creating problems for your Customers' AP Department . Businesses are modernizing their AP Department to remove manual process and deciding to pay their customers electronically via ACH , Credit Card or vCard . These popular methods of ePayment are creating an increase in email remittance . FinTech solution businesses have bridged the gap to helpthose businesses in a cost efficient scalable solution for automating Accounts Receivable .
Features of a FinTech Lockbox
Reduced Cost
The major objective of the FinTech Lockbox is to lowerfees per transaction and produce an Accounts Receivable automation program to permitcompanies to QUICKLY clear cash and improve use of your working capital .
Simple payment trail
It is easy to track incoming ePayments in one location. Instead of flipping through remittance emails or heading to the vendor portal to download payment information . The AR Lockbox provides you with a single spot for a house All of your incoming electronic payments created for faster cash application .
Eliminates mail float
Mail float is a term for the time needed for a check website to travel from the payer to the payee through the postal service . With the increase in B2B payments electronically , mail float is quickly becoming a thingof the past . The increasing amount of click here electronic payments embracing FinTech Lockboxes with a major focus on the fee reduction and speed in which you clear cash and apply it to your working capital .