Are you familiar with 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 many years and a lot of the conventional bank lockbox's lifespan has been utilized for capturing payment data associated with payments made by check. Mainstream offered this benefit to improve effectiveness and flow of company transactions simplifying the accounts receivables collection method.
Clients basically leverage 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 assists 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 client. 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 usually a monthly cost 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 huge 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.
Downsides of a Traditional Bank Lockbox
The lockbox often is relatively high priced . Banks typicallyearn a monthly fee as well as a per line rate connected tohandling payment remittance detail .
Lockboxes may include security concerns . The standard bank lockbox still takes a decent measure of manual re-keying data . With the majority of manual data entry attendance being entry level-administrative employees who are a novice to the financial institution or an outsourced service provider . The data from the lockbox provides all crucial elements to make 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 team still must key in that data into your ERP to clear the cash .
Traditional Bank Lockboxes Are Causing a get more info Problem for your Customers' AP Department . Corporations are modernizing their AP Department to eradicate manual process and opting to pay their customers 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 aidthose companies in a cost efficient scalable solution for automating Accounts Receivable .
Pros of a FinTech Lockbox
Reduction Cost
The primary objective of the FinTech Lockbox will be to lowerfees per transaction and supply an Accounts Receivable automation tool to letorganizations to rapidly clear cash and facilitate use of your working capital .
Easy payment trail
You can easily track incoming ePayments from one location. Rather than flipping through remittance emails or heading to the vendor portal to get payment data . The AR Lockbox provides you with a single location to house All of your incoming electronic payments produced for more rapid cash application .
Eliminates mail float
Mail float is a term for accounts receivable solutions the time needed for a check to travel from the payer to the payee via the postal service . With the rise in B2B payments electronically , mail float is swiftly becoming a productof the past click here . The rise in electronic payments choosing FinTech Lockboxes with a primary focus on the fee reduction and speed in which you clear cash and apply it to your working capital .