Are you aware of the benefits of accounts receivable automation? Traditionally, a bank lockbox has been used by business 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 capturing payment information associated with payments made by check. Mainstream provided this amenity to improve effectiveness and flow of business transactions streamlining the accounts receivables collection method.
Clients generally leverage 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 typically a monthly fee along with a per line remittance data processing cost. To process a large amount of checks over time can be pricey with a lockbox.
Today, we see a big shift with Accounts Payable Departments paying electronically. This shift to ePayments has elevated the FinTech business with {solutions| designed with the goal of decreasing business costs of processing incoming payments.
Drawbacks of a Traditional Bank Lockbox
The lockbox is usually somewhat expensive . Banks normallyacquire a monthly fee along with a per line rate connected withprocessing payment remittance detail .
Lockboxes may contain security issues . The standard bank lockbox still requires a decent amount of manual re-keying information . With the majority of manual data entry attendance being entry level-administrative personnel who are new to the ar automation solutions financial institution or an outsourced contractor . The data from the lockbox gives you all crucial elements to generate a fraudulent check .
Lockboxes don’t connect into your accounting system . Bank lockboxes process the payments and remittance information and thenforward you the information . Your team still must key in that data into your ERP to clear the cash .
Commercial Bank Lockboxes Are Causing a predicament for your Customers' AP Department . Businesses are modernizing their AP Department to eradicate manual task and preferring to pay their customers electronically via ACH , Credit Card or vCard . These popular methods of ePayment are generating an increase in email remittance . FinTech solution companies have bridged the gap to servethose companies in an economical scalable solution for automating Accounts Receivable .
Features of a FinTech Lockbox
Reduced Cost
The main goal of the FinTech Lockbox would be to decreasepricing per transaction and provide an Accounts Receivable automation tool to allowcompanies to rapidly clear cash and facilitate use of your working capital .
Simple payment trail
It is simple to track incoming ePayments in one place. Instead of flipping through remittance emails or heading to the vendor portal to get payment data . The AR Lockbox provides you with one location to house All of your incoming electronic payments produced for speedier cash application .
Removes mail float
Mail float is a term for the time required for a check to go from the payer to the click here payee by means of the postal service . With the increase in B2B payments electronically , mail float is swiftly becoming a thingof the past . The improvement in electronic payments using FinTech Lockboxes with a primary focus on the rate reduction and speed at which you clear cash and apply it to your working capital .