Are you aware of the advantages of accounts receivable automation? Conventionally, a bank lockbox has been used by business Accounts Receivable departments to increase expediency.
Lockboxes have been around for decades 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 streamlining the accounts receivables collection process.
Clients 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 company’s 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 efficiency. The price of the bank lockbox is typically a monthly cost along with a per line remittance data processing cost. To process a huge amount 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 revolutionized the FinTech business with {solutions| designed with the goal of decreasing business costs of processing incoming payments.
Shortcomings of a Traditional Bank Lockbox
The lockbox is usually somewhat high priced . Banks commonlyearn a monthly fee as well as a per line fee connected withhandling payment remittance detail .
Lockboxes may include security concerns . The traditional bank lockbox still requires a fair measure of manual re-keying information . With the majority of manual data entry attendance being website entry level-administrative workers who are a novice to the financial institution or an outsourced service provider . The data from the lockbox provides 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 thenforward you the information . Your personnel still must enter that data into your ERP to clear the cash .
Traditional Bank Lockboxes Are Causing website problems for your Customers' AP Department . Organizations 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 creating an increase in email remittance . FinTech solution businesses have bridged the gap to supportthose businesses in an economical scalable alternative for automating Accounts Receivable .
Advantages of a FinTech Lockbox
Reduction Cost
The major goal of the FinTech Lockbox will be to decreasecost per transaction and supply an Accounts Receivable automation tool to letcompanies to rapidly clear cash and facilitate access to your working capital .
Simple payment trail
It is here easy to track incoming ePayments in one place. Instead of flipping through remittance emails or heading to the vendor portal to download payment data . The AR Lockbox gives you a single place to house ALL your incoming electronic payments produced for faster 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 via the postal service . With the increase in B2B payments electronically , mail float is rapidly becoming a productof the past . The improvement in electronic payments choosing FinTech Lockboxes with a primary focus on the cost reduction and speed at which you clear cash and apply it to your working capital .