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 a lot of the traditional bank lockbox's life has been used for processing payment data associated with payments made by check. Commercial banks offered this amenity to improve effectiveness and flow of company transactions simplifying the accounts receivables collection method.
Customers basically leverage 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 company’s Days Sales Outstanding (DSO). Banks get the paper check, process it along with the remittance data and send the data back to their client. 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 fee along with a per line remittance data processing fee. To process a huge number of checks over time can be costly with a lockbox.
Today, we see a huge change with Accounts Payable Departments paying electronically. This shift to ePayments has revolutionized 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 often is fairly costly . Banks commonlyacquire a monthly rate as well as a per line fee linked tohandling more info payment remittance detail .
Lockboxes can include security concerns . 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 personnel who are new to the financial institution or an outsourced service provider . The information from the lockbox gives you all essential components to make a fraudulent check .
Lockboxes don’t connect into your accounting system . Bank lockboxes process the payments and remittance data and thenforward you the information . Your personnel still must input that data into your ERP to clear the cash .
Financial Institution Lockboxes Are Creating a Problem for your Customers' AP Department . Corporations are modernizing their AP Department to eradicate manual task and deciding to pay their clients electronically via ACH , Credit Card or vCard . These popular methods of ePayment are creating an increase in email remittance . FinTech solution businesses have bridged the gap to helpthose organizations in a cost efficient scalable alternative for automating accounts receivable automation Accounts Receivable .
Advantages of a FinTech Lockbox
Reduced Cost
The major objective of the FinTech Lockbox would be to reducecost per transaction and produce an Accounts Receivable automation program to letbusinesses to QUICKLY clear cash and facilitate use of your working capital .
Easy payment trail
You can easily track incoming ePayments from one location. Rather than flipping through remittance emails or going to the vendor portal to download and read payment data check here . The AR Lockbox provides you with one location to hold ALL your incoming electronic payments meant for swifter 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 via the postal service . With the rise in B2B payments electronically , mail float is quickly turning into a productof the past . The increasing amount of electronic payments embracing FinTech Lockboxes with an essential focus on the price reduction and speed at which you clear cash and apply it to your working capital .