Are you familiar with the advantages of accounts receivable automation? Conventionally, a bank lockbox has been used by organization Accounts Receivable departments to increase efficiency.
Lockboxes have been around for a while now and much of the traditional bank lockbox's life has been utilized for capturing payment data associated with payments made by check. Mainstream provided this service to improve effectiveness and flow of company transactions streamlining the accounts receivables collection process.
Clients basically use 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 customer. Because banks are processing checks and remittance this decreases the customers A/R workforce and increases their productivity. The price of the bank lockbox is usually a monthly cost along with a per line remittance data processing fee. To process a large amount of checks over time can be costly with a lockbox.
Today, we see a big change with Accounts Payable Departments paying electronically. This change to ePayments has elevated the FinTech industry with {solutions| designed with the goal of decreasing business costs of processing incoming payments.
Pitfalls of a Traditional Bank Lockbox
The lockbox is usually somewhat expensive . Banks commonlyacquire a monthly fee along with a per line rate connected withprocessing payment remittance detail .
Lockboxes can include security issues . The traditional bank lockbox still requires a decent level of manual re-keying data . With the majority of manual data entry attendance being entry level-administrative staff who are a novice to the bank or an outsourced contractor . The information from the lockbox provides all required elements to produce a fraudulent check .
Lockboxes don’t tie into your accounting program . Bank lockboxes process your payments and remittance data thensend you the information . Your personnel still must key in that information into your ERP to clear the cash .
Standard Bank Lockboxes Are Creating issues for your Customers' AP Department . Companies are modernizing their AP Department to remove manual process and deciding to pay their customers electronically via ACH , Credit Card or vCard . These preferred methods of ePayment are producing an increase in email remittance . FinTech solution companies have bridged the gap to assistthose companies in an economical scalable option for automating Accounts Receivable .
Features of a FinTech Lockbox
Reduced Cost
The main objective of the FinTech Lockbox would be to lowercost per transaction and supply an Accounts Receivable automation program to permitorganizations to QUICKLY clear cash and facilitate use of your working capital .
Easy payment trail
It is easy to track incoming ePayments from one place. Rather than flipping through remittance emails or heading to the vendor portal to download payment information . The AR Lockbox provides you with one location to hold ALL your incoming electronic payments made for speedier cash application .
Removes mail float
Mail float is a term for the time needed for a check to go from the payer to the payee through the postal service . With the increase in B2B payments electronically , mail float is swiftly turning into a thingof the past . The improvement in electronic payments choosing FinTech Lockboxes with a significant focus on the rate reduction and speed in which you clear more info cash and apply it to your working capital .