Are you aware of the benefits of accounts receivable automation? Conventionally, a bank lockbox has been used by organization Accounts Receivable departments to increase efficiency.
Lockboxes have been around for many years and much of the conventional bank lockbox's life has been utilized for capturing payment information associated with payments made by check. Big provided this service to improve effectiveness and flow of business transactions simplifying the accounts receivables collection method.
Customers generally 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 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 customers 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 large number of checks over time can be expensive with a lockbox.
Today, we see a drastic change with Accounts Payable Departments paying electronically. This change to ePayments has elevated the FinTech industry with {solutions| designed with the goal of decreasing business costs of processing incoming payments.
Drawbacks of a Traditional Bank Lockbox
The lockbox is usually somewhat expensive . Banks commonlyearn a monthly rate as well as a per line rate connected withprocessing payment remittance detail .
Lockboxes may contain security concerns . The standard bank lockbox still requires a fair level of manual re-keying data . With the majority of manual data entry attendance being entry level-administrative staff who are new to the bank or an outsourced contractor . The details from the lockbox can provide all needed elements to produce 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 personnel still must input that information into your ERP to clear the cash .
Traditional Bank Lockboxes Are Creating issues for your Customers' AP Department . Corporations are modernizing their AP Department to get rid of 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 companies have bridged the gap to supportthose organizations in an economical scalable option for automating Accounts Receivable .
Features of a FinTech Lockbox
Reduction Cost
The primary goal of the FinTech Lockbox is usually to decreasepricing per transaction and supply an Accounts Receivable automation program to letorganizations to QUICKLY clear cash and facilitate use of your working capital .
Simple payment trail
It is easy to track incoming ePayments in one location. Rather than flipping through remittance emails or heading to the vendor portal to get payment information . The AR Lockbox provides you with one spot for a hold All of your incoming electronic payments meant for faster cash application .
Removes mail float
Mail float is a term for the time needed for a check to go from the payer to the payee through the postal service . With the rise in B2B payments electronically , mail float is swiftly becoming a thingof the past . The get more info improvement in electronic payments choosing FinTech Lockboxes with a significant focus on the cost reduction and speed in which you clear cash and apply it to your working capital .