Are you aware of the benefits of accounts receivable automation? Conventionally, a bank lockbox has been used by company Accounts Receivable departments to increase efficiency.
Lockboxes have been around for decades and much of the conventional bank lockbox's lifespan has been used for capturing payment data associated with payments made by check. Commercial banks offered this benefit to improve effectiveness and flow of business 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 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 clients A/R workforce and increases their efficiency. The cost of the bank lockbox is typically a monthly fee along with a per line remittance data processing cost. 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 revolutionized the FinTech trade with {solutions| designed with the goal of decreasing business costs of processing incoming payments.
Disadvantages of a Traditional Bank Lockbox
The lockbox could be somewhat high priced . Banks generallyearn a monthly fee along with a per line fee related toprocessing payment remittance detail .
Lockboxes may include security issues . The standard bank lockbox still takes a decent measure of manual re-keying information . With the majority of more info manual data entry attendance being entry level-administrative staff who are new to the financial institution or an outsourced contractor . The details from the lockbox gives you all essential elements to produce a fraudulent check .
Lockboxes don’t tie into your accounting system . Bank lockboxes process the payments and remittance information and thenforward you the information here . Your personnel still must key in that information into your ERP to clear the cash .
Traditional Bank Lockboxes Are Causing difficulty for your Customers' AP Department . Corporations are modernizing their AP Department to get rid of manual process and preferring to pay their clients 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 assistthose organizations in an economical scalable alternative for automating Accounts Receivable .
Advantages of a FinTech Lockbox
Reduced Cost
The major goal of the FinTech Lockbox will be to decreasecost per transaction and provide an Accounts Receivable automation application to letbusinesses to QUICKLY clear cash and facilitate access to your working capital .
Trouble-free payment trail
You can easily track incoming ePayments from one location. Instead of flipping through remittance emails or going to the vendor portal to get payment data . The AR Lockbox provides you with one spot for a hold All of your incoming electronic payments meant read more for more rapid cash application .
Eliminates mail float
Mail float is a term for the time needed for a check to travel 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 rise in electronic payments adopting FinTech Lockboxes with a significant focus on the price reduction and speed in which you clear cash and apply it to your working capital .