Do you know the advantages of accounts receivable automation? Traditionally, a bank lockbox has been used by organization Accounts Receivable departments to increase efficiency.
Lockboxes have been around for many years and a lot of the conventional bank lockbox's life has been utilized for processing payment data associated with payments made by check. Commercial banks offered this service 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 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 information back to their client. 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 fee along with a per line remittance data processing fee. To process a huge amount of checks over time can be pricey 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 can be fairly high priced . Banks usuallyearn a monthly fee in addition to a per line rate connected tohandling payment remittance detail .
Lockboxes may include security issues . The standard bank lockbox still takes a website decent measure of manual re-keying information . With the majority of manual data entry attendance being entry level-administrative staff who are a novice to the financial institution or an outsourced service provider . The data from the lockbox can provide 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 a predicament for your Customers' AP Department . Corporations are modernizing their AP Department to remove manual process and preferring to pay their clients electronically via ACH , Credit Card or vCard . These desired methods of ePayment are producing an increase in email remittance . FinTech solution companies have bridged the gap to assistthose businesses in an economical scalable alternative for automating Accounts Receivable .
Features of a FinTech Lockbox
Reduction Cost
The major goal of the FinTech Lockbox will be to reducepricing per transaction and provide an Accounts Receivable automation program to permitcompanies to QUICKLY clear cash and facilitate access to your working capital .
Trouble-free payment trail
It is simple to track incoming ePayments from one place. Instead of flipping through remittance emails or heading to the vendor portal to get payment information . The AR Lockbox gives you one spot for a house All of your incoming electronic payments made for speedier cash application .
Eliminates mail float
Mail float is a term for the time required 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 productof the past . The improvement in electronic payments choosing FinTech Lockboxes with an essential focus on the rate reduction and speed in which you clear cash and apply it to your working capital .