Are you familiar with the advantages of accounts receivable automation? Conventionally, a bank lockbox has been used by company Accounts Receivable departments to increase expediency.
Lockboxes have been around for decades and a lot of the conventional bank lockbox's lifespan has been utilized for capturing payment information associated with payments made by check. Mainstream provided this service 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 decrease mail delivery time, which also helps with lowering the business’ Days Sales Outstanding (DSO). Banks get 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 productivity. The cost of the bank lockbox is usually a monthly cost along with a per line remittance data processing cost. To process a large number 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 elevated the FinTech trade with {solutions| designed with the goal of decreasing business costs of processing incoming payments.
Disadvantages of a Traditional Bank Lockbox
The lockbox often is somewhat expensive . Banks usuallyacquire a monthly fee along with a per line accounts receivable solutions rate related tohandling payment remittance detail .
Lockboxes can contain security issues . The traditional bank lockbox still requires a fair level of manual re-keying data . With the majority of manual data entry attendance being entry level-administrative workers who are a novice to the financial institution or an outsourced contractor . The details from the lockbox gives you all essential elements to produce a fraudulent check .
Lockboxes don’t tie into your accounting program . Bank lockboxes process the 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 a predicament for your Customers' AP Department . Companies are modernizing their AP Department to get rid of manual task and preferring to pay their clients electronically via ACH , Credit Card or vCard . These popular 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 .
Benefits of a FinTech Lockbox
Reduced Cost
The main goal of the FinTech Lockbox would be website to reducecost per get more info transaction and supply an Accounts Receivable automation program to allowcompanies to QUICKLY clear cash and facilitate use of your working capital .
Trouble-free payment trail
You can easily track incoming ePayments in one location. Instead of flipping through remittance emails or heading to the vendor portal to get payment data . The AR Lockbox gives you a single place to hold ALL your incoming electronic payments made for quicker cash application .
Eliminates mail float
Mail float is a term for the time required for a check to go from the payer to the payee by way of the postal service . With the rise in B2B payments electronically , mail float is rapidly becoming a thingof the past . The increasing amount of electronic payments choosing FinTech Lockboxes with a major focus on the price reduction and speed at which you clear cash and apply it to your working capital .