Do you know 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 decades and much of the traditional bank lockbox's life has been utilized for processing payment information associated with payments made by check. Commercial banks provided this service to improve effectiveness and flow of company transactions simplifying the accounts receivables collection process.
Customers 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 assists with lowering the business’ 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 clients 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 cost. To process a huge 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 could be somewhat high priced . Banks commonlyearn a monthly rate in addition to a per line fee related tohandling payment remittance detail .
Lockboxes can contain security issues . 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 staff who are a novice to the bank or an outsourced contractor . The details from the lockbox provides all vital elements to produce a fraudulent check .
Lockboxes don’t connect into your accounting system . Bank lockboxes process your payments and remittance data and thenforward you the information . Your organization still must enter that data into your ERP to clear the cash .
Standard Bank Lockboxes Are Creating a predicament for your Customers' AP Department . Corporations are modernizing here their AP Department to eliminate manual process and preferring to pay their customers electronically via ACH , Credit Card or vCard . These desired methods of ePayment are producing an increase in email remittance . FinTech solution businesses have bridged the gap to helpthose firms in an economical scalable alternative for automating Accounts Receivable .
Features of a FinTech Lockbox
Reduction Cost
The major objective of the FinTech Lockbox will be to decreasecost per transaction and produce an Accounts Receivable automation application to alloworganizations to QUICKLY clear cash and improve use of your working capital .
Easy payment trail
It is easy to track incoming ePayments in one place. Rather than flipping through remittance emails or heading to the vendor portal to download payment information . The check here AR Lockbox provides you with one place to house All of your incoming electronic payments made for swifter cash application .
Eliminates mail float
Mail float is a term for the time required for a check to go from the payer to the payee via the postal service . With the rise in B2B payments electronically , mail float is rapidly turning into a productof the past . The increasing amount of electronic payments using FinTech Lockboxes with a significant focus on the price reduction and speed at which you clear cash and apply it to your working capital .