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 a lot of the traditional bank lockbox's lifespan has been utilized for processing payment data associated with payments made by check. Commercial banks offered this service to improve effectiveness and flow of business 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 reduce mail delivery time, which also assists 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 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 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 change to ePayments has revolutionized the FinTech trade with {solutions| designed with the goal of decreasing business costs of processing incoming payments.
Downsides of a Traditional Bank Lockbox
The lockbox is often rather costly . Banks generallyearn a monthly fee in addition to a per line fee connected tohandling payment remittance detail .
Lockboxes can include security concerns . The standard bank lockbox still takes a decent measure of manual re-keying information . With the majority of manual data entry attendance being entry level-administrative workers who are new to the financial more info institution or an outsourced contractor . The details from the lockbox gives you all necessary 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 .
Commercial Bank Lockboxes Are Creating difficulty for your Customers' AP Department . Corporations are modernizing their AP Department to get rid of manual task and opting to pay their customers electronically via ACH , Credit click here Card or vCard . These popular methods of ePayment are generating an increase in email remittance . FinTech solution businesses have bridged the gap to servethose corporations in a cost efficient scalable alternative for automating Accounts Receivable .
Rewards of a FinTech Lockbox
Reduced Cost
The main objective of the FinTech Lockbox will be to decreasecost per transaction and provide an Accounts Receivable automation application to helporganizations to QUICKLY clear cash and improve use of your working capital .
Simple payment trail
You can easily track incoming ePayments from one place. Rather than flipping through remittance emails or heading to the vendor portal to get payment information . The AR Lockbox gives you a single location 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 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 improvement in electronic payments choosing FinTech Lockboxes with an essential focus on the fee reduction and speed at which you clear cash and apply it to your working capital .