Are you aware of the benefits of accounts receivable automation? Conventionally, 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 traditional bank lockbox's lifespan has been utilized for capturing payment information associated with payments made by check. Mainstream provided this amenity to improve effectiveness and flow of company transactions streamlining the accounts receivables collection process.
Clients basically use 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 assists with lowering the business’ Days Sales Outstanding (DSO). Banks receive 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 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 costly with a lockbox.
Today, we see a huge shift with Accounts Payable Departments paying electronically. This shift to ePayments has revolutionized the FinTech trade with {solutions| designed with the goal of decreasing business costs of processing incoming payments.
Pitfalls of a Traditional Bank Lockbox
The lockbox often is fairly costly . Banks normallyearn a monthly fee in addition to a per line fee associated withhandling payment remittance detail .
Lockboxes may contain security concerns . The traditional bank lockbox still requires a fair level of manual re-keying data . With the majority of manual data entry attendance being entry level-administrative personnel who are a novice to the financial institution accounts receivable solutions or an outsourced service provider . The data from the lockbox can provide all needed components to produce a fraudulent check .
Lockboxes don’t tie into your accounting system . Bank lockboxes process your payments and remittance data and thenforward you the information . Your personnel still must enter that data into your ERP to clear the cash .
Standard Bank Lockboxes Are Causing a Problem for your Customers' AP Department . Companies are modernizing their AP Department to get rid of manual process and deciding to pay their clients electronically via ACH , Credit Card or vCard . These popular methods of ePayment are producing an increase in email remittance . FinTech solution companies have bridged the gap to aidthose organizations in a cost efficient scalable alternative for automating Accounts Receivable .
Rewards of a FinTech Lockbox
Reduction Cost
The major objective of the FinTech Lockbox would be to reducepricing per transaction and produce an Accounts Receivable automation application to permitcompanies to rapidly clear cash and improve use of your working capital .
Simple payment trail
It is simple to track incoming ePayments in one location. Rather than flipping through remittance emails or heading to the vendor portal to get payment data . The AR Lockbox provides you with one spot get more info for a hold ALL your incoming electronic payments meant for speedier cash application .
Eliminates mail float
Mail float is a term for the time needed for a check to travel from the payer to the payee through the postal service . With the rise in B2B payments electronically , mail float is quickly turning website into a thingof the past . The improvement in electronic payments using FinTech Lockboxes with a primary focus on the fee reduction and speed at which you clear cash and apply it to your working capital .