Are you aware of the advantages of accounts receivable automation? Traditionally, a bank lockbox has been used by company Accounts Receivable departments to increase efficiency.
Lockboxes have been around for many years and a lot of the traditional bank lockbox's lifespan has been used for capturing payment data associated with payments made by check. Mainstream offered this amenity to improve effectiveness and flow of company transactions simplifying the accounts receivables collection process.
Clients generally 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 assists 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 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 large number of checks over time can be expensive with a lockbox.
Today, we see a huge shift with Accounts Payable Departments paying electronically. This shift to ePayments has elevated the FinTech trade with {solutions| designed with the goal of decreasing business costs of processing incoming payments.
Disadvantages of a Traditional Bank Lockbox
The lockbox is usually fairly high priced . Banks normallyacquire a monthly fee along with a per line fee connected tohandling payment remittance detail .
Lockboxes may contain security issues . The standard bank lockbox still requires a fair amount of manual re-keying information . With the majority of manual data entry attendance being entry level-administrative workers who are new to the financial institution or an outsourced contractor . The details from the lockbox can provide all essential elements to create a fraudulent check .
Lockboxes don’t connect into your accounting program . Bank lockboxes process your payments and remittance data and thensend you the information . Your organization still must key in that information into your here ERP to clear the cash .
Standard Bank Lockboxes Are Creating issues for your Customers' AP Department . Organizations are modernizing their AP Department to get rid of manual process and preferring to pay their clients electronically via ACH , Credit Card or vCard . These preferred methods of ePayment are producing an increase in email remittance . FinTech solution companies have bridged the gap to supportthose businesses in a cost effective scalable option for automating Accounts Receivable .
Features of a FinTech Lockbox
Reduction Cost
The major goal of the FinTech Lockbox would be to reducepricing per transaction and supply an Accounts Receivable automation tool to allowcompanies to QUICKLY clear cash and facilitate use of your working capital .
Trouble-free payment trail
It is easy to track incoming ePayments from one location. Instead of flipping through remittance emails or heading to the vendor portal to download and read payment information . The AR Lockbox provides you with a single location to hold All of your incoming electronic payments meant for speedier cash application .
Eliminates mail float
Mail float is check here a term for website the time required for a check to go from the payer to the payee from the postal service . With the rise in B2B payments electronically , mail float is quickly becoming a productof the past . The increasing amount of electronic payments using FinTech Lockboxes with an essential focus on the cost reduction and speed in which you clear cash and apply it to your working capital .