Do you know the benefits of accounts receivable automation? Traditionally, a bank lockbox has been used by business Accounts Receivable departments to increase efficiency.
Lockboxes have been around for many years and much of the traditional bank lockbox's lifespan has been used for processing payment information associated with payments made by check. Mainstream provided this benefit to improve effectiveness and flow of company transactions simplifying the accounts receivables collection process.
Clients 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 helps with lowering the business’ Days Sales Outstanding (DSO). Banks get the paper check, process it along with the remittance data and send the data back to their client. Because banks are processing checks and remittance this decreases the customers A/R workforce and increases their efficiency. The price of the bank lockbox is typically a monthly fee along with a per line remittance data processing fee. To process a huge number of checks over time can be expensive with a lockbox.
Today, we see a drastic shift with Accounts Payable Departments paying electronically. This shift to ePayments has elevated the FinTech industry with {solutions| designed with the goal of decreasing business costs of processing incoming payments.
Shortcomings of a Traditional Bank Lockbox
The lockbox is usually rather high priced . Banks normallyacquire a monthly fee in addition to a per line fee connected withprocessing payment remittance detail .
Lockboxes can include security issues . The traditional bank lockbox still requires a decent level of manual re-keying data . With the majority of manual data entry attendance being entry level-administrative employees who are new to the bank or an outsourced contractor . The data from the lockbox can provide all essential components to create 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 .
Financial Institution Lockboxes Are Creating problems for your Customers' AP Department read more . Businesses are modernizing their AP Department to get rid of manual task and deciding to pay their clients electronically via ACH , Credit Card or vCard . These desired methods of ePayment are creating an increase in email remittance . FinTech solution companies have bridged the gap to helpthose companies in a cost effective scalable solution for automating Accounts Receivable .
Benefits of a FinTech Lockbox
Reduced Cost
The main objective of the FinTech Lockbox will be to decreasecost per transaction and produce an Accounts Receivable automation application to permitorganizations to rapidly clear cash and improve use of your working capital .
Easy payment trail
It is easy to track incoming ePayments in one location. Rather than flipping through remittance emails or going to the vendor portal to get payment data . The AR Lockbox provides you with one destination to house All of your incoming electronic payments created for swifter cash application .
Removes mail float
Mail float is a term for the time needed 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 becoming a productof the past . The increase in electronic payments embracing FinTech Lockboxes with a primary focus on the fee reduction and speed in which you clear cash and apply it to your working capital .