Do you know the advantages of accounts receivable automation? Traditionally, a bank lockbox has been used by business Accounts Receivable departments to increase efficiency.
Lockboxes have been around for many years and much of the traditional bank lockbox's lifespan has been utilized for capturing payment information associated with payments made by check. Big provided this amenity to improve effectiveness and flow of business 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 reduce mail delivery time, which also helps with lowering the business’ Days Sales Outstanding (DSO). Banks receive the paper check, process it along with the remittance data and send the information back to their client. Because banks are processing checks and remittance this decreases the customers A/R workforce and increases their efficiency. The cost of the bank lockbox is typically a monthly cost along with a per line remittance data processing fee. To process a huge amount 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 industry with {solutions| designed with the goal of decreasing business costs of processing incoming payments.
Disadvantages of a Traditional Bank Lockbox
The lockbox is often rather costly . Banks commonlyacquire a monthly fee along with a per line rate associated withprocessing payment remittance detail .
Lockboxes can contain security concerns read more . The standard bank lockbox still takes 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 gives you all essential elements to make a fraudulent check .
Lockboxes don’t connect into your accounting program . Bank lockboxes process the payments and remittance information thenforward you the information . Your organization still must key in that information into your ERP to clear the cash .
Commercial Bank Lockboxes Are Causing difficulty for your Customers' AP Department . Corporations are modernizing their AP Department to remove manual task and deciding to pay their clients 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 helpthose organizations in a cost efficient scalable alternative for automating Accounts Receivable .
Features of a FinTech Lockbox
Reduction Cost
The primary objective of the FinTech Lockbox is usually to decreasepricing per transaction and supply an Accounts Receivable automation click here tool to permitcompanies to rapidly clear cash and facilitate use of your working capital .
Easy payment trail
You can easily track incoming here 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 one spot for a house All of your incoming electronic payments produced for more rapid cash application .
Eliminates 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 quickly becoming a thingof the past . The improvement in electronic payments using FinTech Lockboxes with a significant focus on the price reduction and speed in which you clear cash and apply it to your working capital .