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 a while now and much of the conventional 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 company transactions simplifying the accounts receivables collection method.
Customers 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 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 customers A/R workforce and increases their productivity. The cost of the bank lockbox is typically a monthly cost along with a per line remittance data processing fee. To process a large number 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 revolutionized the FinTech business with {solutions| designed with the goal of decreasing business costs of processing incoming payments.
Shortcomings of a Traditional Bank Lockbox
The lockbox often is rather high priced . Banks typicallyacquire a monthly rate along with a per line rate associated withprocessing payment remittance detail .
Lockboxes may contain security issues . The traditional bank lockbox still requires a decent measure of manual re-keying information . With the majority of manual data entry attendance being entry level-administrative personnel who are new to the bank or an outsourced contractor . The information from the lockbox provides all crucial elements to generate a fraudulent check .
Lockboxes don’t tie into your accounting system . Bank lockboxes process your payments and remittance information thensend you the information . Your organization still must enter that information into your ERP to clear the cash .
Financial Institution Lockboxes Are Causing problems for your Customers' AP Department . Organizations are modernizing their AP Department to eliminate manual task and preferring to pay their customers electronically via ACH , Credit Card or vCard . These popular methods of ePayment are producing an increase in email remittance . FinTech solution businesses have bridged the gap to servethose organizations in an economical scalable option for automating Accounts Receivable .
Rewards of a FinTech Lockbox
Reduced Cost
The major objective of the FinTech Lockbox will be to lowerpricing per transaction and produce an Accounts Receivable automation program to permitbusinesses to rapidly clear cash and facilitate access to your working capital .
Simple 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 and read payment data . The AR Lockbox provides you with a single destination to house All of your incoming electronic payments created for faster cash application .
Gets rid of mail float
Mail float is a term for the time required for read more a check to go from the payer to the payee through the postal service . With the rise in B2B payments electronically , mail float is swiftly becoming a thingof the past . The rise in electronic payments adopting FinTech Lockboxes with a significant focus on the cost reduction and speed in which you clear cash and apply it to your working capital .