Do you know the benefits of accounts receivable automation? Traditionally, a bank lockbox has been used by business Accounts Receivable departments to increase expediency.
Lockboxes have been around for decades and a lot of the conventional bank lockbox's lifespan has been used for processing payment data associated with payments made by check. Big offered this benefit to improve effectiveness and flow of business transactions streamlining the accounts receivables collection process.
Customers basically 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 business’ Days Sales Outstanding (DSO). Banks receive the paper check, process it along with the remittance data and send the data back to their client. Because banks are processing checks and remittance this decreases the clients A/R workforce and increases their efficiency. The price of the bank lockbox is typically a monthly cost along with a per line remittance data processing fee. To process a huge number of checks over time can be expensive with a lockbox.
Today, we see a drastic shift with Accounts Payable Departments paying electronically. This shift to ePayments has revolutionized the FinTech trade with {solutions| designed with the goal of decreasing business costs of processing incoming payments.
Weaknesses of a Traditional Bank Lockbox
The lockbox could be fairly costly . Banks generallyearn a monthly fee as well as a per line rate connected withprocessing payment remittance detail .
Lockboxes can contain security issues . The traditional bank lockbox still requires a decent more info 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 information from the lockbox gives you all required components to make a fraudulent check .
Lockboxes don’t tie into your accounting program . Bank lockboxes process your payments and remittance data thenforward you the information . Your organization still must input that information into your ERP to clear the cash .
Commercial Bank Lockboxes Are Creating problems for your Customers' AP Department . Businesses are modernizing their AP Department to get rid of manual task and opting to pay their customers electronically via ACH , Credit Card or vCard . These desired methods of ePayment are producing an increase in email remittance . FinTech solution companies have bridged the gap to supportthose firms in a cost efficient scalable option for automating Accounts Receivable .
Advantages of a FinTech Lockbox
Reduced Cost
The primary objective of the FinTech Lockbox is usually to lowerfees per transaction and provide an Accounts Receivable automation application to helpcompanies to QUICKLY clear cash and improve access to your working capital .
Trouble-free payment trail
You can easily track incoming ePayments from one place. Rather than flipping through remittance emails or heading to the vendor portal to download payment information . The AR Lockbox provides you with one destination to hold ALL your incoming electronic payments created for swifter 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 through the postal service . With the rise in B2B payments electronically , mail float is swiftly turning into a productof the past . The increase in electronic payments using FinTech Lockboxes with a major focus on the price reduction and speed at which you clear cash and apply it to your working capital .