Are you aware of the benefits 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 lifespan has been used for processing payment data associated with payments made by check. Mainstream offered this amenity to improve effectiveness and flow of company transactions streamlining the accounts receivables collection method.
Clients 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 business’ 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 typically 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 drastic change with Accounts Payable Departments paying electronically. This shift to ePayments has revolutionized the FinTech business with {solutions| designed with the goal of decreasing business costs of processing incoming payments.
Downsides of a Traditional Bank Lockbox
The lockbox is usually fairly high priced . Banks commonlyearn a monthly fee as well as a per line rate related tohandling payment remittance detail .
Lockboxes may include security concerns . The traditional bank lockbox still check here takes a decent amount of manual re-keying data . With the majority of manual data entry attendance being entry level-administrative personnel who are a novice to the financial institution or an outsourced contractor . The information from the lockbox gives you all required components to generate a fraudulent check .
Lockboxes don’t tie into your accounting system . Bank lockboxes process your payments and remittance data and thenforward you the information . Your personnel still must enter that data into your ERP to clear the cash .
Traditional Bank Lockboxes Are Creating a predicament for your Customers' AP Department . Corporations are modernizing their AP Department to remove manual task and opting to pay their customers electronically via ACH , Credit Card or vCard . These preferred methods of ePayment are creating an increase in email remittance . FinTech solution businesses have bridged the gap to aidthose corporations in an economical scalable option for automating Accounts Receivable .
Advantages of a FinTech Lockbox
Reduced Cost
The main goal of the FinTech Lockbox is to lowerfees per transaction and provide an Accounts Receivable automation program to permitorganizations to QUICKLY clear cash and facilitate access to your working capital .
Trouble-free payment trail
It is simple to track incoming ePayments from one place. Instead of flipping through remittance emails or going to the vendor portal to get payment information . The AR Lockbox gives you a get more info single place to house All of your incoming electronic payments made for more rapid cash application .
Gets rid of mail float
Mail float is a term for the time required for a check to travel from the payer to the payee by means of the postal service . With the increase in B2B payments electronically , mail float is swiftly becoming a productof the past . The increasing amount of electronic payments using FinTech Lockboxes with a major focus on the rate reduction and speed at which you clear cash and apply it to your working capital .