Are you aware of the advantages of accounts receivable automation? Conventionally, a bank lockbox has been used by organization Accounts Receivable departments to increase expediency.
Lockboxes have been around for decades and much of the traditional bank lockbox's lifespan has been utilized for processing payment data associated with payments made by check. Commercial banks 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 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 productivity. The cost of the bank lockbox is typically 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 drastic shift 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.
Shortcomings of a Traditional Bank Lockbox
The lockbox could be rather high priced . Banks generallyearn a monthly fee in addition to a per line fee connected tohandling payment remittance detail .
Lockboxes may include 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 workers who are new to the bank or an outsourced contractor . The information from the lockbox can provide all needed components to create a check here fraudulent check .
Lockboxes don’t tie into your accounting system . Bank lockboxes process your payments and remittance data thenforward you the information . Your team still must enter that information into your ERP to clear the cash .
Standard Bank Lockboxes Are Creating a predicament for your Customers' AP Department . Corporations are modernizing their AP Department to remove manual task and opting to pay their clients electronically via ACH , Credit Card or vCard . These desired methods of ePayment are generating an increase in email remittance . FinTech solution companies have bridged the gap to check here supportthose firms in a cost effective scalable option for automating Accounts Receivable .
Rewards of a FinTech Lockbox
Reduced Cost
The major goal of the FinTech Lockbox is to lowerpricing per transaction and provide an Accounts Receivable automation tool to permitorganizations to rapidly clear cash and facilitate use of your working capital .
Simple payment trail
It is easy to track incoming ePayments from one location. Rather than flipping through remittance emails or going to the vendor portal to get payment data . The AR Lockbox gives you a single spot for a hold ALL your incoming electronic payments created for speedier cash application .
Removes mail float
Mail float is a term for the time required for a check to travel from the payer to the payee through the postal service . With the increase in B2B payments electronically , mail float is quickly becoming a productof the past . The increase in electronic payments choosing FinTech Lockboxes with a significant focus on the fee reduction and speed at which you clear cash and apply it to your working capital .