Are you aware of the benefits of accounts receivable automation? Traditionally, a bank lockbox has been used by business Accounts Receivable departments to increase expediency.
Lockboxes have been around for decades and much of the traditional bank lockbox's life has been used for processing payment information associated with payments made by check. Big offered 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 strategically placed in a central location to decrease mail delivery time, which also helps 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 customer. 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 fee 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 big shift with Accounts Payable Departments paying electronically. This shift to ePayments has revolutionized the FinTech industry with {solutions| designed with the goal of decreasing business costs of processing incoming payments.
Weaknesses of a Traditional Bank Lockbox
The lockbox could be rather expensive . Banks normallyearn a monthly fee as well as a per line fee connected withprocessing payment remittance detail .
Lockboxes can contain security concerns . The traditional bank lockbox still requires a decent measure of manual re-keying information . With the majority of manual data entry attendance being entry level-administrative employees who are new to the bank or an outsourced contractor . The information from the lockbox provides all crucial elements to produce a fraudulent check .
Lockboxes don’t tie into your accounting program . Bank lockboxes process your payments and remittance information thensend you the information . Your organization still must key in that data into your ERP to clear the cash .
Traditional Bank Lockboxes Are Causing difficulty for your Customers' AP Department . Companies are modernizing their AP Department to eliminate manual process and deciding to pay their clients electronically via ACH , Credit Card website or vCard . These desired methods of ePayment click here are generating an increase in email remittance . FinTech solution businesses have bridged the gap to supportthose corporations in a cost effective scalable option for automating Accounts Receivable .
Benefits of a FinTech Lockbox
Reduced Cost
The main goal of the FinTech Lockbox is to reducefees per transaction and produce an Accounts Receivable automation tool to permitorganizations to rapidly clear cash and improve use of your working capital .
Simple payment trail
You can easily track incoming ePayments from one place. Instead of flipping through remittance emails or heading to the vendor portal to download payment information . The AR Lockbox gives you a single location to hold ALL your incoming electronic payments meant for swifter cash application .
Removes mail float
Mail float is a term for the time needed for a check to travel from the payer to the payee from the postal service . With the increase in B2B payments electronically , mail float is swiftly becoming a productof the past . The increase in electronic payments embracing FinTech Lockboxes with an essential focus on the rate reduction and speed at which you clear cash and apply it to your working capital .