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 many years and much of the traditional bank lockbox's life has been utilized for capturing payment data associated with payments made by check. Big offered this amenity to improve effectiveness and flow of business transactions simplifying the accounts receivables collection process.
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 receive the paper check, process it along with the remittance data and send the information back to their customer. Because banks are processing checks and remittance this decreases the clients A/R workforce and increases their efficiency. 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 huge change with Accounts Payable Departments paying electronically. This shift to ePayments has elevated the FinTech trade with {solutions| designed with the goal of decreasing business costs of processing incoming payments.
Shortcomings of a Traditional Bank Lockbox
The lockbox can be rather high priced . Banks normallyacquire a monthly fee as well as a per line fee associated withhandling payment remittance detail .
Lockboxes can contain security issues . The traditional bank lockbox still takes a decent level of manual re-keying data . With the majority of manual data entry attendance being entry level-administrative personnel who are new to the financial institution or an outsourced contractor . The details from the lockbox can provide all crucial elements to generate a fraudulent check .
Lockboxes don’t tie into your accounting program . Bank lockboxes process the payments and remittance data and thensend you the information . Your organization still must enter that information into your ERP to clear more info the cash .
Financial Institution Lockboxes Are Causing issues for your Customers' AP Department . Corporations 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 businesses have bridged the gap to aidthose firms in an economical scalable alternative for automating Accounts Receivable .
Features of a FinTech Lockbox
Reduced Cost
The main goal of the FinTech Lockbox is to reducecost per transaction and provide an Accounts Receivable automation program to letcompanies to rapidly clear cash and improve use of your working capital .
Simple payment trail
It is easy check here to track incoming ePayments from one place. Instead of flipping through remittance emails or going to the vendor portal to download and read payment data . The AR Lockbox gives you one place to hold All of your incoming electronic payments produced for quicker cash application .
Removes mail float
Mail float is a term for the time needed for a check to travel from the payer to the payee through the postal service . With the rise in B2B payments electronically , mail float is rapidly becoming a thingof the past . The improvement in electronic payments adopting FinTech Lockboxes with a major focus on the cost reduction and speed at which you clear cash and apply it to your working capital .