Do you know 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 many years and much of the traditional bank lockbox's life has been used for processing payment information associated with payments made by check. Big provided this amenity to improve effectiveness and flow of company transactions simplifying the accounts receivables collection process.
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 business’ Days Sales Outstanding (DSO). Banks get 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 efficiency. The price of the bank lockbox is usually a monthly fee along with a per line remittance data processing fee. To process a large number of checks over time can be expensive with a lockbox.
Today, we see a huge shift with Accounts Payable Departments paying electronically. This change to ePayments has elevated the FinTech trade with {solutions| designed with the goal of decreasing business costs of processing incoming payments.
Shortcomings of a Traditional Bank Lockbox
The lockbox is often relatively high priced . Banks generallyacquire a monthly fee in addition to a per line rate associated withhandling payment remittance detail .
Lockboxes may contain security concerns . The standard bank lockbox still takes a decent amount of manual re-keying data . With the majority of manual data entry attendance being entry level-administrative employees who are a novice to the financial institution or an outsourced contractor . The details from the lockbox provides all required elements to create a fraudulent check .
Lockboxes don’t tie into your accounting system . Bank lockboxes process your payments and remittance data and thensend you the information . Your organization still must input that data into your ERP to clear the cash .
Financial Institution Lockboxes Are Creating issues for your Customers' AP Department . Corporations are modernizing their AP Department to eliminate manual task and deciding 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 the gap to servethose corporations read more in a cost effective scalable option for automating Accounts Receivable .
Pros of a FinTech Lockbox
Reduction Cost
The primary objective of the FinTech Lockbox is usually to reducepricing per transaction and supply an Accounts Receivable automation tool to helpbusinesses to QUICKLY clear cash and facilitate access to your working capital .
Simple payment trail
You can easily track incoming ePayments from one location. Rather than flipping through remittance emails or heading to the vendor portal to get ar lockbox payment information . The AR Lockbox gives you a single destination to house ALL your incoming electronic payments produced for faster cash application .
Removes mail float
Mail float is a term for the time needed for a check to go from the payer to the payee by means of the postal service . With the rise in B2B payments electronically , mail float is quickly becoming a productof the past . The increasing amount of electronic payments using FinTech Lockboxes with a major focus on the rate reduction and speed in which you clear cash and apply it to your working capital .