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 used for capturing payment data associated with payments made by check. Big provided this service to improve effectiveness and flow of company transactions simplifying the accounts receivables collection process.
Clients 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 helps with lowering the business’ Days Sales Outstanding (DSO). Banks receive 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 efficiency. The cost of the bank lockbox is typically a monthly cost along with a per line remittance data processing fee. To process a large amount of checks over time can be expensive with a lockbox.
Today, we see a huge 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.
Weaknesses of a Traditional Bank Lockbox
The lockbox could be relatively high priced . Banks commonlyearn a monthly rate in addition to a per line fee connected withprocessing payment remittance detail .
Lockboxes may contain security concerns . The standard bank lockbox still requires a decent level of manual re-keying information . 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 can provide all required elements to produce a fraudulent check .
Lockboxes don’t connect into your accounting program . Bank lockboxes process the payments and remittance data and thenforward you the information . Your organization still must enter that information into your ERP to clear the accounts receivable solutions cash .
Standard Bank Lockboxes Are Creating a Problem for your Customers' AP Department . Companies are modernizing their AP Department to remove manual process and opting 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 supportthose organizations in a cost efficient scalable solution for automating Accounts Receivable .
Advantages of a FinTech Lockbox
Reduced Cost
The major goal of the FinTech Lockbox would be to decreasefees per transaction and supply an Accounts Receivable automation program to helporganizations to rapidly clear cash and facilitate use of your working capital .
Trouble-free payment trail
It is easy to track incoming ePayments from one location. Instead of flipping through remittance emails or going to the vendor portal to get payment data . The AR Lockbox gives you one destination to hold All of your incoming electronic payments meant for swifter cash application .
Gets rid of mail float
Mail float is a term for the time needed for a check to go from the payer to the payee by means of the postal service . With the increase in B2B payments electronically , mail float is quickly becoming a thingof the past . The improvement in electronic payments adopting FinTech Lockboxes with a major focus on the cost reduction and speed in which you clear cash and apply it to your working capital .