Are you familiar with the advantages of accounts receivable automation? Traditionally, a bank lockbox has been used by organization Accounts Receivable departments to increase efficiency.
Lockboxes have been around for decades and much of the conventional bank lockbox's life has been utilized for processing payment information associated with payments made by check. Big offered this service to improve effectiveness and flow of company transactions streamlining the accounts receivables collection process.
Clients basically leverage 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 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 productivity. The price of the bank lockbox is usually a monthly cost along with a per line remittance data processing cost. To process a large amount of checks over time can be expensive with a lockbox.
Today, we see a drastic shift 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.
Pitfalls of a Traditional Bank Lockbox
The lockbox can be fairly costly . Banks generallyearn a monthly rate in addition to a per line fee linked tohandling payment remittance detail .
Lockboxes can include security concerns . The standard bank lockbox still requires a decent amount of manual re-keying information . With the majority of manual data entry attendance being entry level-administrative personnel who are new to the financial institution or an outsourced contractor . The data from the lockbox provides all needed elements to make a fraudulent check .
Lockboxes don’t connect into your accounting program . Bank lockboxes process your payments and remittance data thenforward you the information . Your team still must input that data into your ERP to clear the cash .
Traditional Bank Lockboxes Are Causing problems for your Customers' AP Department . Businesses are modernizing their AP Department to eliminate manual task and opting to pay their clients electronically via ACH , Credit Card or vCard . These popular methods of ePayment are generating an increase in email remittance . FinTech solution businesses have bridged the gap to helpthose corporations in a cost effective scalable alternative for automating Accounts Receivable .
Pros of a FinTech Lockbox
Reduced Cost
The major objective of the FinTech Lockbox would be to decreasefees per transaction and supply an Accounts Receivable automation program to allowcompanies to QUICKLY clear cash and facilitate access to your working capital .
Simple payment trail
It is easy to track incoming ePayments in one place. Instead of flipping through remittance emails or going to the vendor portal to download payment information . The AR Lockbox gives you a single location to hold ALL your incoming electronic payments made for speedier 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 through the postal service . With the rise in B2B payments get more info electronically , mail float is swiftly becoming a productof the past . The improvement in electronic payments adopting FinTech Lockboxes with a significant focus on the fee reduction and speed in which you clear cash and apply it to your working capital .