Are you familiar with the advantages of accounts receivable automation? Conventionally, a bank lockbox has been used by organization Accounts Receivable departments to increase efficiency.
Lockboxes have been around for decades and a lot of the traditional bank lockbox's life has been used for processing payment information associated with payments made by check. Big offered this amenity to improve effectiveness and flow of business transactions simplifying 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 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 client. Because banks are processing checks and remittance this decreases the customers A/R workforce and increases their productivity. The price of the bank lockbox is typically a monthly fee along with a per line remittance data processing fee. To process a huge amount of checks over time can be pricey 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.
Weaknesses of a Traditional Bank Lockbox
The lockbox is usually somewhat expensive . Banks commonlyacquire a monthly rate as well as a per line fee related toprocessing payment remittance detail .
Lockboxes can contain security concerns . The traditional bank lockbox still takes a decent level of manual re-keying data . With the majority of manual data entry attendance being entry level-administrative staff who are a novice to the financial institution or an outsourced service read more provider . The data from the lockbox can provide all needed components to generate a fraudulent check .
Lockboxes don’t tie into your accounting program . Bank lockboxes process your payments and remittance information and thenforward you the information . Your personnel still must key in that information into your ERP to clear the cash .
Traditional Bank Lockboxes Are Causing a predicament for your Customers' AP Department . Businesses are modernizing their AP Department to eliminate manual process and preferring to pay their clients electronically via ACH , Credit Card or vCard . These preferred methods of ePayment are creating an increase in email remittance . FinTech solution businesses have bridged the gap to aidthose organizations in a cost efficient scalable solution for automating Accounts Receivable .
Advantages of a FinTech Lockbox
Reduction Cost
The major goal of the FinTech Lockbox will be to decreasecost per transaction and supply an Accounts Receivable automation tool to helpbusinesses to rapidly clear cash and improve use of your working capital .
Trouble-free payment trail
It is simple to track incoming ePayments in one place. Instead of flipping through remittance emails or heading to the vendor portal to download payment information . The AR Lockbox provides you with one spot for a house ALL your incoming electronic payments created for faster cash application .
Removes 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 swiftly turning into a productof the past . The increase in electronic payments using FinTech Lockboxes with an essential focus on the fee reduction and speed in which you clear cash and apply it to your working capital .