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 decades and much of the traditional bank lockbox's life has been used for processing payment information associated with payments made by check. Mainstream provided this amenity to improve effectiveness and flow of business transactions streamlining the accounts receivables collection method.
Customers basically leverage 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 clients A/R workforce and increases their productivity. The cost of the bank lockbox is usually a monthly fee along with a per line remittance data processing fee. To process a large number of checks over time can be pricey with a lockbox.
Today, we see a huge change with Accounts Payable Departments paying electronically. This shift 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 is usually relatively high priced . Banks normallyacquire a monthly fee in addition to a per line rate linked tohandling payment remittance detail .
Lockboxes can include security concerns . The traditional bank lockbox still takes a fair level of manual re-keying information . With the majority of manual data entry attendance being entry level-administrative staff who are new to more info the financial institution or an outsourced contractor . The details from the lockbox gives you all crucial elements to make a fraudulent check .
Lockboxes don’t tie into your accounting program . Bank lockboxes process the payments and remittance information thensend you the information . Your team still must key in that information into your ERP to clear the cash .
Standard Bank Lockboxes Are Causing problems for your Customers' AP Department . Companies are modernizing their AP Department to eliminate manual process and preferring to pay their clients electronically via ACH , Credit Card or vCard . These desired methods of ePayment are producing an increase in email remittance . FinTech solution businesses have check here bridged the gap to helpthose corporations in a cost effective scalable alternative for automating Accounts Receivable .
Benefits of a FinTech Lockbox
Reduction Cost
The primary goal of the FinTech Lockbox is to lowerpricing per transaction and produce an Accounts Receivable automation program to letbusinesses to QUICKLY clear cash and improve use of your working capital .
Simple payment trail
It is simple to track incoming ePayments in one location. Rather than flipping through remittance emails or going to the vendor portal to download and read payment information . The AR Lockbox gives you a single spot for a house ALL your incoming electronic payments meant for speedier cash application .
Removes mail float
Mail float is a term for the time required for a check to go 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 improvement in 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 .