Are you aware of the benefits of accounts receivable automation? Conventionally, a bank lockbox has been used by business Accounts Receivable departments to increase expediency.
Lockboxes have been around for a while now and a lot of the conventional bank lockbox's lifespan has been used for processing payment data associated with payments made by check. Mainstream provided this benefit to improve effectiveness and flow of business transactions streamlining the accounts receivables collection process.
Customers 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 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 efficiency. The cost of the bank lockbox is typically a monthly fee along with a per line remittance data processing cost. To process a huge amount of checks over time can be expensive with a lockbox.
Today, we see a huge change with Accounts Payable Departments paying electronically. This shift to ePayments has elevated the FinTech business with {solutions| designed with the goal of decreasing business costs of processing incoming payments.
Disadvantages of a Traditional Bank Lockbox
The lockbox is usually relatively expensive . Banks commonlyacquire a monthly rate along with a per line fee connected withhandling payment remittance detail .
Lockboxes may include security issues . The standard bank lockbox still takes a decent amount of manual re-keying data . With the majority of manual data entry attendance being entry level-administrative personnel who are a novice to the website bank or an outsourced service provider . The data from the lockbox provides all required elements to generate a fraudulent check .
Lockboxes don’t connect into your accounting program . Bank lockboxes process your payments and remittance data and thenforward you the information . Your team still must input that information into your ERP to clear the cash .
Standard Bank Lockboxes Are Creating issues for your Customers' AP Department . Companies are modernizing their AP Department to get rid of manual process and opting to pay their customers 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 supportthose businesses in a cost effective scalable option ar automation solutions for automating Accounts Receivable .
Pros of a FinTech Lockbox
Reduced Cost
The main goal of the FinTech Lockbox is to lowerfees per transaction and provide an Accounts Receivable automation tool to helpbusinesses to QUICKLY clear cash and facilitate use of your working capital .
Easy 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 ar automation solutions data . The AR Lockbox provides you with one place to hold ALL your incoming electronic payments meant for speedier cash application .
Removes 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 increase in B2B payments electronically , mail float is quickly turning into a productof the past . The increasing amount of 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 .