Are you familiar with the advantages of accounts receivable automation? Traditionally, a bank lockbox has been used by company Accounts Receivable departments to increase efficiency.
Lockboxes have been around for decades and much of the conventional bank lockbox's lifespan has been utilized for processing payment information associated with payments made by check. Big provided this service to improve effectiveness and flow of company 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 decrease 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 information back to their customer. Because banks are processing checks and remittance this decreases the clients A/R workforce and increases their efficiency. The cost of the bank lockbox is typically 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 big change 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 usually relatively costly . Banks generallyacquire a monthly rate as well as a per line fee related tohandling payment remittance detail .
Lockboxes may contain security issues . The traditional bank lockbox still requires a decent amount of manual re-keying data . With the majority read more of manual data entry attendance being entry level-administrative employees who are a novice to the bank or an outsourced contractor . The data from the lockbox provides all vital elements to produce a fraudulent check .
Lockboxes don’t connect into your accounting program . Bank lockboxes process the payments and remittance data and thensend you the information . Your team still must input that information into your ERP to clear the cash .
Financial Institution Lockboxes Are Creating a Problem for your Customers' AP Department . Businesses are modernizing their AP Department to remove manual task and opting to pay their customers electronically via ACH , Credit Card or vCard . These desired methods of read more ePayment are creating check here an increase in email remittance . FinTech solution businesses have bridged the gap to helpthose firms in a cost efficient scalable alternative for automating Accounts Receivable .
Advantages of a FinTech Lockbox
Reduction Cost
The primary objective of the FinTech Lockbox would be to reducepricing per transaction and supply an Accounts Receivable automation program to letcompanies to rapidly clear cash and improve use of your working capital .
Trouble-free payment trail
It is simple to track incoming ePayments from one place. Rather than flipping through remittance emails or heading to the vendor portal to download payment information . The AR Lockbox provides you with one destination to hold ALL your incoming electronic payments produced for quicker cash application .
Gets rid of 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 swiftly turning into a thingof the past . The rise in electronic payments embracing FinTech Lockboxes with a significant focus on the cost reduction and speed at which you clear cash and apply it to your working capital .