Are you familiar with the benefits of accounts receivable automation? Conventionally, a bank lockbox has been used by organization Accounts Receivable departments to increase efficiency.
Lockboxes have been around for many years and much of the traditional bank lockbox's life has been used for processing payment data associated with payments made by check. Mainstream provided this amenity to improve effectiveness and flow of business transactions streamlining 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 decrease mail delivery time, which also assists with lowering the business’ Days Sales Outstanding (DSO). Banks receive 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 typically a monthly fee along with a per line remittance data processing cost. To process a large number of checks over time can be expensive with a lockbox.
Today, we see a drastic change with Accounts Payable Departments paying electronically. This change to ePayments has revolutionized the FinTech business with {solutions| designed with the goal of decreasing business costs of processing incoming payments.
Drawbacks of a Traditional Bank Lockbox
The lockbox is often somewhat high priced . Banks typicallyearn a monthly fee along with a per line fee connected withhandling payment remittance detail .
Lockboxes may include security issues . The standard bank lockbox still takes a fair level of manual re-keying data . With the majority of manual data entry attendance being entry level-administrative workers who are new to the bank or ar lockbox an outsourced contractor . The information from the lockbox provides all needed components to create a fraudulent check .
Lockboxes don’t tie into your accounting program . Bank lockboxes process the payments and remittance data and thensend you the information . Your personnel still must enter that data into your ERP to clear the cash .
Commercial Bank Lockboxes Are Creating problems for your Customers' AP Department . Businesses are modernizing their AP Department to get rid of manual task and deciding to pay their customers electronically via ACH , Credit Card or vCard . These preferred methods of ePayment are generating an increase in email remittance . FinTech solution businesses have bridged the gap to aidthose organizations in a cost effective scalable solution for automating Accounts Receivable .
Pros of a FinTech Lockbox
Reduction Cost
The primary objective of the FinTech Lockbox would be to reducepricing per transaction and supply an Accounts Receivable automation program to letcompanies to rapidly clear cash and improve use of your working capital .
Simple payment trail
You can easily track incoming ePayments from one place. Instead of flipping through remittance emails or heading to the vendor portal to get payment data . The AR ar lockbox Lockbox gives you a single location to hold All of your incoming electronic payments created for quicker cash application .
Gets rid of mail float
Mail float is a term for the time required for a check to travel from the payer to the payee through the postal service . With the rise in B2B payments electronically , mail float is swiftly becoming a thingof the past . The increase in electronic payments choosing FinTech Lockboxes with an essential focus on the fee reduction and speed in which you clear cash and apply it to your working capital .