Are you aware of the advantages of accounts receivable automation? Conventionally, a bank lockbox has been used by company Accounts Receivable departments to increase expediency.
Lockboxes have been around for decades and a lot of the conventional bank lockbox's life has been utilized for capturing payment information associated with payments made by check. Mainstream provided this service to improve effectiveness and flow of business transactions streamlining the accounts receivables collection process.
Clients basically 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 company’s Days Sales Outstanding (DSO). Banks receive the paper check, process it along with the remittance data and send the data back to their client. Because banks are processing checks and remittance this decreases the clients A/R workforce and increases their efficiency. The cost of the bank lockbox is usually a monthly cost along with a per line remittance data processing fee. To process a huge number of checks over time can be pricey with a lockbox.
Today, we see a drastic change with Accounts Payable Departments paying electronically. This change to ePayments has revolutionized the FinTech trade with {solutions| designed with the goal of decreasing business costs of processing incoming payments.
Weaknesses of a Traditional Bank Lockbox
The lockbox can be somewhat costly . Banks usuallyacquire a monthly rate as well as a per line rate connected withhandling payment remittance detail .
Lockboxes may include security issues . The standard bank lockbox still takes a fair level of manual re-keying data . With the majority of manual data entry attendance being entry level-administrative workers who are a click here novice to the financial institution or an outsourced contractor . The details from the lockbox gives you all crucial components to make a fraudulent check .
Lockboxes don’t tie into your accounting system . Bank lockboxes process the payments and remittance data and thenforward you the information . Your organization still must input that information into your ERP to clear the cash .
Traditional Bank Lockboxes Are Creating a predicament for your Customers' AP Department . Corporations are modernizing their AP Department to eliminate manual process and preferring to pay their customers electronically via ACH , Credit Card or vCard . These desired methods of ePayment are producing an increase in email remittance . FinTech solution companies have bridged the gap to servethose businesses in a cost effective scalable alternative for automating Accounts Receivable .
Features of a FinTech Lockbox
Reduced Cost
The main goal of the FinTech Lockbox would be to reducecost per transaction and provide an Accounts Receivable automation tool to helporganizations to rapidly clear cash and improve access to your working capital .
Easy payment trail
You can easily track incoming ePayments from one place. Rather than flipping through remittance emails or heading to the vendor portal to download and read payment information . The AR Lockbox gives you a single spot for a house ALL your incoming electronic payments meant for swifter 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 from the postal service . With the increase in B2B payments electronically , mail float is quickly turning into a productof the past . The increase in electronic payments adopting FinTech Lockboxes with a significant focus on the fee reduction and speed at which you clear cash and apply it to your working capital .