Are you aware of the benefits of accounts receivable automation? Traditionally, 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 conventional bank lockbox's life has been used for capturing payment information associated with payments made by check. Mainstream offered this amenity to improve effectiveness and flow of company transactions simplifying the accounts receivables collection method.
Customers basically use 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 helps with lowering the business’ 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 productivity. The price of the bank lockbox is typically a monthly cost along with a per line remittance data processing cost. To process a large number of checks over time can be costly with a lockbox.
Today, we see a huge shift with Accounts Payable Departments paying electronically. This change to ePayments has revolutionized the FinTech industry with {solutions| designed with the goal of decreasing business costs of processing incoming payments.
Shortcomings of a Traditional Bank Lockbox
The lockbox is often relatively expensive . Banks typicallyearn a monthly fee in addition to a per line rate associated withhandling payment remittance detail .
Lockboxes may include security issues . The standard bank lockbox still takes a fair amount of manual re-keying data . With the majority of manual data entry attendance being entry level-administrative personnel who are a novice to the financial institution or an outsourced service provider . The data from the read more lockbox provides all crucial elements to make a fraudulent check .
Lockboxes don’t connect into your accounting program . Bank lockboxes process your payments and remittance data and thensend you the information . Your personnel click here still must enter that data into your ERP to clear the cash .
Traditional Bank Lockboxes Are Causing difficulty for your Customers' AP Department . Companies are modernizing their AP Department to eliminate manual task and opting to pay their customers electronically via ACH , Credit Card or vCard . These desired methods of ePayment are creating an increase in email remittance . FinTech solution companies have bridged the gap to supportthose businesses in an economical scalable alternative for automating Accounts Receivable .
Advantages of a FinTech Lockbox
Reduction Cost
The primary goal of the FinTech Lockbox is to decreasepricing per transaction and supply an Accounts Receivable automation tool to alloworganizations to QUICKLY clear cash and facilitate access to get more info your working capital .
Simple payment trail
You can easily track incoming ePayments from one location. Rather than flipping through remittance emails or heading to the vendor portal to download payment data . The AR Lockbox provides you with one destination to hold ALL your incoming electronic payments produced for quicker cash application .
Gets rid of mail float
Mail float is a term for the time needed for a check to travel from the payer to the payee by way of the postal service . With the increase in B2B payments electronically , mail float is rapidly becoming a thingof the past . The increase in electronic payments using FinTech Lockboxes with a significant focus on the cost reduction and speed at which you clear cash and apply it to your working capital .