Are you aware of the advantages of accounts receivable automation? Traditionally, a bank lockbox has been used by company Accounts Receivable departments to increase expediency.
Lockboxes have been around for many years and a lot of the traditional bank lockbox's life has been used for processing payment information associated with payments made by check. Commercial banks offered this service to improve effectiveness and flow of company transactions simplifying 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 helps with lowering the business’ Days Sales Outstanding (DSO). Banks receive 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 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 big shift with Accounts Payable Departments paying electronically. This shift to ePayments has revolutionized the FinTech business with {solutions| designed with the goal of decreasing business costs of processing incoming payments.
Pitfalls of a Traditional Bank Lockbox
The lockbox is usually fairly costly . Banks commonlyearn a monthly fee along with a per line fee connected toprocessing payment remittance detail .
Lockboxes can contain website security issues . The traditional bank lockbox still requires a decent measure of manual re-keying data . With the majority of manual data entry attendance being entry level-administrative workers who are a novice to the financial institution or an outsourced service provider . The details from the lockbox gives you all vital elements to make a fraudulent check .
Lockboxes don’t connect into your accounting program . Bank lockboxes process the payments and remittance information thensend you the information . Your organization still must key in that information into your ERP to clear the cash .
Commercial Bank Lockboxes Are Causing difficulty for your Customers' AP Department . Corporations are modernizing their AP Department to remove manual task and opting to pay their customers electronically via ACH , Credit Card or vCard . These preferred methods of ePayment are generating read more an increase in email remittance . FinTech solution businesses have bridged the gap to servethose businesses in a cost effective scalable option for automating Accounts Receivable .
Rewards of a FinTech Lockbox
Reduction Cost
The major goal of the FinTech Lockbox is to lowerfees per transaction and produce an Accounts Receivable automation application to alloworganizations to QUICKLY clear cash and facilitate use of your ar lockbox working capital .
Easy payment trail
It is easy to track incoming ePayments in one place. Instead of flipping through remittance emails or going to the vendor portal to get payment information . The AR Lockbox gives you one destination to hold All of your incoming electronic payments created for quicker 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 increase in B2B payments electronically , mail float is rapidly becoming a thingof the past . The rise in electronic payments choosing FinTech Lockboxes with a primary focus on the price reduction and speed at which you clear cash and apply it to your working capital .