Are you aware of the advantages of accounts receivable automation? Traditionally, a bank lockbox has been used by company Accounts Receivable departments to increase expediency.
Lockboxes have been around for a while now and much of the conventional bank lockbox's lifespan has been used for processing payment information associated with payments made by check. Mainstream offered this benefit to improve effectiveness and flow of business transactions streamlining the accounts receivables collection method.
Customers generally leverage the bank lockbox to receive check payments in one consistent location.
Bank lockboxes are purposefully placed in a central location to reduce mail delivery time, which also assists with lowering the company’s 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 fee along with a per line remittance data processing cost. To process a huge amount of checks over time can be expensive with a lockbox.
Today, we see a huge shift with Accounts Payable Departments paying electronically. This change to ePayments has elevated the FinTech business 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 costly . Banks typicallyacquire a monthly rate in addition to a per line rate related tohandling payment remittance detail .
Lockboxes may contain security concerns . The standard bank lockbox still takes a decent amount of manual re-keying data . With the majority of manual data entry attendance being entry level-administrative staff who are new to the financial institution or an outsourced service provider . The details from the lockbox can provide all necessary components to generate a fraudulent check .
Lockboxes don’t connect into your accounting system . Bank lockboxes process your payments and remittance data and thenforward you the information . Your personnel still must enter that information into your ERP to clear the cash .
Commercial Bank Lockboxes Are Creating difficulty for your Customers' AP Department . Corporations are modernizing their AP Department to eradicate manual process and preferring to pay their clients electronically via ACH , Credit Card or vCard . These popular methods of ePayment are producing an increase in email remittance . FinTech solution companies have bridged the gap to assistthose businesses in an economical scalable option for automating Accounts Receivable .
Features of a FinTech Lockbox
Reduction Cost
The major objective of the FinTech Lockbox will be to reducepricing per transaction and supply an Accounts Receivable automation tool to letbusinesses to rapidly clear cash and improve use of your working capital .
Simple payment trail
You can easily track incoming ePayments from one place. Instead of flipping through remittance emails or going to the vendor portal to get payment data . The click here AR Lockbox provides you with one destination to house 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 go from the payer to the payee from the postal service . With the increase in B2B payments check here electronically , mail float is quickly turning into a thingof the past . The rise in electronic payments using FinTech Lockboxes with an essential focus on the fee reduction and speed at which you clear cash and apply it to your working capital .