Are you familiar with the benefits of accounts receivable automation? Traditionally, 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 conventional bank lockbox's lifespan has been utilized for capturing payment information associated with payments made by check. Mainstream offered this amenity to improve effectiveness and flow of business transactions streamlining the accounts receivables collection method.
Customers generally use the bank lockbox to receive check payments in one consistent location.
Bank lockboxes are strategically placed in a central location to decrease mail delivery time, which also assists with lowering the business’ 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 large number of checks over time can be expensive with a lockbox.
Today, we see a big shift with Accounts Payable Departments paying electronically. This shift to ePayments has elevated 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 rather high priced . Banks usuallyearn a monthly fee along with a per line fee associated withprocessing payment remittance detail .
Lockboxes can contain security issues . The standard bank lockbox still requires a fair measure of manual re-keying information . With the majority of manual data entry attendance being entry level-administrative staff who are a novice to the bank or an outsourced contractor . The information from the lockbox can provide all needed elements to produce a fraudulent check .
Lockboxes don’t connect into your accounting system . Bank lockboxes process the payments and remittance data thensend you the information . Your personnel still must enter that data into your ERP to clear the cash .
Traditional Bank Lockboxes Are Creating problems for your Customers' AP Department . Corporations are modernizing their AP Department to eradicate manual task and preferring to pay their clients electronically via ACH , website Credit Card or vCard . These preferred methods of ePayment are generating an increase in email remittance . FinTech solution businesses have bridged the gap to helpthose companies in a cost efficient scalable alternative for automating Accounts Receivable .
Features click here of a FinTech Lockbox
Reduction Cost
The main goal of the FinTech Lockbox would be to decreasecost per transaction and produce an Accounts Receivable automation tool to helpbusinesses to QUICKLY clear cash and facilitate access to your working capital .
Simple payment trail
You can easily track incoming ePayments from one place. Instead of flipping through remittance emails or going to the vendor portal to get payment data . The AR Lockbox gives you a single location to hold ALL your incoming electronic payments made for swifter cash application .
Gets rid of mail float
Mail float is a term for the time needed for a check to travel from the payer to the payee by means of the postal service . With the increase in B2B payments electronically , mail float is swiftly becoming a thingof the past . The increasing amount of electronic payments using FinTech Lockboxes with a significant focus on the price reduction and speed in which you clear cash and apply it to your working capital .