Are you familiar with the advantages of accounts receivable automation? Conventionally, a bank lockbox has been used by organization Accounts Receivable departments to increase expediency.
Lockboxes have been around for many years and much of the traditional bank lockbox's life has been used for processing payment information associated with payments made by check. Big offered this service to improve effectiveness and flow of business transactions streamlining the accounts receivables collection method.
Clients basically leverage the bank lockbox to receive check payments in one consistent location.
Bank lockboxes are strategically placed in a central location to reduce mail delivery time, which also assists 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 productivity. The cost of the bank lockbox is typically a monthly fee along with a per line remittance data processing fee. To process a huge number of checks over time can be pricey with a lockbox.
Today, we see a huge shift with Accounts Payable Departments paying electronically. This change to ePayments has revolutionized the FinTech trade with {solutions| designed with the goal of decreasing business costs of processing incoming payments.
Drawbacks of a Traditional Bank Lockbox
The lockbox is usually rather high priced . Banks typicallyacquire a monthly fee in addition to a per line rate linked toprocessing payment remittance detail .
Lockboxes may include security concerns . The traditional bank lockbox still takes a decent measure of manual re-keying data . With the majority of manual data entry attendance being entry level-administrative workers who are a novice to the bank or an outsourced service provider . The information from the lockbox can provide all essential components to produce a fraudulent check .
Lockboxes don’t tie into your accounting program . Bank lockboxes process your payments and remittance data thenforward you the information . Your team still must key in that data into your ERP to clear the cash .
Financial Institution Lockboxes Are Causing a predicament for your Customers' AP Department . Companies are modernizing their AP Department to eradicate manual task and deciding to pay their customers electronically via ACH , Credit Card or vCard . These preferred methods of ePayment are creating an increase in email remittance . FinTech solution companies have bridged the gap to servethose companies check here in a cost efficient scalable alternative for automating Accounts Receivable .
Benefits of a FinTech Lockbox
Reduced Cost
The major objective of the FinTech Lockbox will be to lowerpricing per transaction and supply an Accounts Receivable automation tool to allowcompanies to rapidly clear cash and improve use of your working capital .
Trouble-free payment trail
It is easy to track incoming ePayments in one location. Instead of flipping through remittance emails or going to the vendor portal to download and read payment data . The AR Lockbox gives you a single location to hold ALL your incoming electronic payments made for faster cash application .
Gets rid of mail float
Mail float is a term for the time required 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 rapidly turning into a productof the past . The increase in electronic payments embracing FinTech Lockboxes with an essential focus on the rate reduction and speed at which you clear cash and apply it to your working capital .