Are you familiar with the advantages of accounts receivable automation? Traditionally, a bank lockbox has been used by organization Accounts Receivable departments to increase efficiency.
Lockboxes have been around for many years and a lot of the conventional bank lockbox's lifespan has been used for processing payment information associated with payments made by check. Big offered this benefit to improve effectiveness and flow of business transactions streamlining the accounts receivables collection method.
Clients basically use the bank lockbox to receive check payments in one consistent location.
Bank lockboxes are purposefully placed in a central location to reduce 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 data back to their customer. Because banks are processing checks and remittance this decreases the clients A/R workforce and increases their productivity. The price of the bank lockbox is typically a monthly fee along with a per line remittance data processing cost. To process a huge number of checks over time can be costly with a lockbox.
Today, we see a big change with Accounts Payable Departments paying electronically. This change to ePayments has elevated 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 often is somewhat expensive . Banks generallyearn a monthly fee as well as a per line rate associated withprocessing payment remittance detail here .
Lockboxes can include security issues . The traditional bank lockbox still requires 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 the bank or an outsourced contractor . The details from the lockbox gives you all needed elements to produce a fraudulent check .
Lockboxes don’t connect into your accounting system . Bank lockboxes process your payments and remittance information and thenforward you the information . Your team still must input that information into your ERP to clear the cash .
Standard Bank Lockboxes Are Creating a predicament for your Customers' AP Department . Companies are modernizing their AP Department to remove manual task and opting to pay their clients electronically via read more ACH , Credit Card or vCard . These preferred methods of ePayment are producing an increase in email remittance . FinTech solution businesses have bridged the gap to servethose corporations in a cost effective scalable alternative for automating Accounts Receivable .
Benefits of a FinTech Lockbox
Reduction Cost
The major goal of the FinTech Lockbox is to reducecost 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 easy to track incoming ePayments from one place. Instead of flipping through remittance emails or going to the vendor portal to download payment information . The AR Lockbox gives you one spot for a hold ALL your incoming electronic payments meant for swifter cash application .
Removes mail float
Mail float is a term for the time required for a check to travel from the payer to the payee via the postal service . With the rise in B2B payments here electronically , mail float is rapidly becoming a productof the past . The rise in electronic payments choosing FinTech Lockboxes with a primary focus on the price reduction and speed in which you clear cash and apply it to your working capital .