Are you aware of the benefits of accounts receivable automation? Conventionally, a bank lockbox has been used by business Accounts Receivable departments to increase expediency.
Lockboxes have been around for decades and a lot of the conventional bank lockbox's life has been used for capturing payment information associated with payments made by check. Mainstream offered this service to improve effectiveness and flow of business transactions simplifying the accounts receivables collection method.
Clients basically leverage the bank lockbox to receive check payments in one consistent location.
Bank lockboxes are purposefully placed in a central location to reduce 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 customer. 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 cost along with a per line remittance data processing fee. To process a huge amount of checks over time can be costly with a lockbox.
Today, we see a drastic 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.
Downsides of a Traditional Bank Lockbox
The lockbox can be relatively costly . Banks typicallyacquire a monthly rate in addition to a per line rate connected withprocessing payment remittance detail .
Lockboxes can include security concerns . The traditional bank lockbox still requires a decent measure of manual re-keying information . With the majority of manual data entry attendance being entry level-administrative personnel who are a novice to the financial institution or an outsourced service provider . The data from the lockbox gives you all needed check here components 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 . Your team still must enter that data into your ERP to clear the cash .
Standard Bank Lockboxes Are Creating problems for your Customers' AP Department . Businesses 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 desired methods of ePayment are generating an increase in email remittance . FinTech solution companies have bridged the gap to assistthose corporations in a cost efficient scalable solution for automating Accounts Receivable .
Pros of a FinTech Lockbox
Reduction Cost
The primary goal of the FinTech Lockbox is to decreasepricing per transaction and supply an Accounts Receivable automation program to permitorganizations to QUICKLY clear cash and improve use of your working capital .
Easy payment trail
It is simple to track incoming ePayments from one place. Rather than flipping through remittance emails or going to the vendor portal to download and read payment information . The AR Lockbox gives you a single destination to hold ALL your incoming electronic payments produced for faster cash application .
Removes 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 rapidly turning into a thingof the past . The rise in electronic payments using FinTech Lockboxes with a major focus on the fee reduction and speed in which you clear cash and apply it to your working capital .