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 many years and much of the conventional bank lockbox's lifespan has been used for processing payment information associated with payments made by check. Commercial banks provided this service 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 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 customer. 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 cost. To process a huge amount of checks over time can be costly with a lockbox.
Today, we see a big shift 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 is often fairly expensive . Banks usuallyearn a monthly rate along with a per line rate connected withprocessing payment remittance detail .
Lockboxes may contain security issues . The traditional bank lockbox still takes a fair measure of manual re-keying data . With the majority of manual data entry attendance being entry level-administrative employees who are a novice to the bank or an outsourced check here service provider . The information from the lockbox can provide all essential components to generate a fraudulent check .
Lockboxes don’t tie into your accounting system . Bank lockboxes process the payments and remittance data thenforward you the information . Your organization still must enter that information into your ERP to clear the cash .
Standard Bank Lockboxes Are Creating difficulty for your Customers' AP Department . Organizations are modernizing their AP Department to eliminate manual process and opting to pay their clients electronically via ACH , Credit Card or vCard . These preferred methods of ePayment are producing an increase in email remittance . FinTech accounts receivable solutions solution businesses have bridged the gap to assistthose check here firms in an economical scalable solution for automating Accounts Receivable .
Advantages of a FinTech Lockbox
Reduced Cost
The major goal of the FinTech Lockbox will be to lowercost per transaction and provide an Accounts Receivable automation tool to permitbusinesses to rapidly clear cash and facilitate access to your working capital .
Simple payment trail
It is simple to track incoming ePayments from one place. Instead of flipping through remittance emails or heading to the vendor portal to download payment data . The AR Lockbox gives you one destination to house ALL your incoming electronic payments created for speedier cash application .
Removes mail float
Mail float is a term for the time required for a check to travel from the payer to the payee via the postal service . With the rise in B2B payments electronically , mail float is swiftly turning into a productof the past . The rise in electronic payments using FinTech Lockboxes with an essential focus on the cost reduction and speed in which you clear cash and apply it to your working capital .