Are you aware of the benefits of accounts receivable automation? Traditionally, a bank lockbox has been used by organization Accounts Receivable departments to increase expediency.
Lockboxes have been around for a while now and a lot of the conventional bank lockbox's life has been used for capturing payment information associated with payments made by check. Big provided this amenity to improve effectiveness and flow of company 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 decrease mail delivery time, which also assists 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 customer. Because banks are processing checks and remittance this decreases the clients A/R workforce and increases their efficiency. The price of the bank lockbox is usually 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 drastic 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.
Disadvantages of a Traditional Bank Lockbox
The lockbox can be fairly expensive . Banks usuallyearn a monthly fee along with a per line fee related toprocessing payment remittance detail .
Lockboxes may include security issues . The traditional bank lockbox still requires a decent amount of manual re-keying data . With the majority of manual data entry attendance being entry level-administrative employees who are a novice to the bank or an outsourced contractor . The data from the lockbox can provide all required elements to create a fraudulent check .
Lockboxes don’t connect into your accounting program . Bank lockboxes process your payments and remittance information and thensend you the information . Your organization still must key in that information into your ERP to clear the cash .
Standard Bank Lockboxes Are Causing issues for your Customers' AP Department . Corporations are modernizing their AP Department to eradicate manual process and deciding to pay their clients electronically via ACH , Credit Card or vCard . These desired methods of ePayment are generating an increase in email remittance . FinTech solution businesses have bridged the gap to aidthose corporations in an economical scalable solution for automating Accounts Receivable .
Advantages of a FinTech Lockbox
Reduction Cost
The primary objective of the FinTech Lockbox is to decreasefees per transaction and supply an Accounts Receivable automation tool to letcompanies read more to rapidly clear cash and facilitate access to your working capital .
Simple payment trail
You can easily track incoming ePayments in one location. Rather than flipping through remittance emails or going to the vendor portal to download and read payment data . The AR Lockbox gives you a single spot for a house ALL your incoming electronic payments produced for more rapid cash application .
Gets rid of 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 rise in B2B payments electronically , mail float is swiftly becoming a productof the past . The increasing amount of electronic payments adopting FinTech Lockboxes with a major focus on the rate reduction and speed in which you clear cash and apply it to your working capital .