Are you aware of 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 used for capturing payment data associated with payments made by check. Big offered this benefit to improve effectiveness and flow of company transactions simplifying the accounts receivables collection method.
Clients 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 company’s Days Sales Outstanding (DSO). Banks get the paper check, process it along with the remittance data and send the information back to their customer. Because banks are processing checks and remittance this decreases the customers A/R workforce and increases their efficiency. The cost of the bank lockbox is typically a monthly fee along with a per line remittance data processing cost. 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 shift to ePayments has elevated 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 somewhat expensive . Banks generallyearn a monthly fee along with a per line rate connected tohandling payment remittance detail .
Lockboxes can contain security issues . The standard bank lockbox still requires a fair measure of manual re-keying information . With the majority of manual data entry attendance being entry level-administrative personnel who are new to the financial institution or an outsourced service provider . The details from the lockbox provides all needed elements to make a fraudulent check .
Lockboxes don’t tie into your accounting system . Bank lockboxes process the payments and remittance data thenforward you the information . Your team still must enter that information into your ERP to clear the cash .
Financial Institution Lockboxes Are Causing difficulty for your Customers' AP Department . Organizations are modernizing their AP Department to get rid of manual task and opting to pay their customers electronically via ACH , Credit Card or vCard . These desired methods of ePayment are creating an increase in email remittance . FinTech solution businesses read more have bridged the gap to aidthose companies in a cost effective scalable alternative for automating Accounts Receivable .
Rewards of a FinTech Lockbox
Reduced Cost
The primary objective of the FinTech Lockbox is to decreasecost per transaction and supply an Accounts Receivable automation program to alloworganizations to QUICKLY clear cash and improve use of your working capital .
Easy payment trail
It is simple to track incoming ePayments in one place. Rather than flipping through remittance emails or going to the vendor portal to download payment information . The AR Lockbox gives you one place to hold ALL your incoming electronic payments made for quicker cash application .
Eliminates mail float
Mail float is a term for the time needed for a check to go from the payer to the payee from the postal service . With the increase in B2B payments electronically , mail float is swiftly becoming a thingof the past . The improvement in electronic payments adopting FinTech Lockboxes with a significant focus on the fee reduction and speed in which you clear cash and apply it to your working capital .