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 a while now and much of the conventional bank lockbox's lifespan has been utilized for processing payment information associated with payments made by check. Mainstream offered this benefit to improve effectiveness and flow of business transactions streamlining the accounts receivables collection process.
Customers generally 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 client. Because banks are processing checks and remittance this decreases the customers 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 number of checks over time can be costly with a lockbox.
Today, we see a big shift with Accounts Payable Departments paying electronically. This shift to ePayments has revolutionized the FinTech business with {solutions| designed with the goal of decreasing business costs of processing incoming payments.
Downsides of a Traditional Bank Lockbox
The lockbox often is somewhat costly . Banks commonlyacquire a monthly fee in addition to a per line rate connected withhandling payment remittance detail .
Lockboxes may 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 workers who are new here to the financial institution or an outsourced service provider . The data from the lockbox can provide all essential components to generate a fraudulent check .
Lockboxes don’t connect into your accounting program . Bank lockboxes process the payments and remittance information thensend you the information . Your organization still must key in that information into your ERP to clear the cash .
Traditional Bank Lockboxes Are Creating a predicament for your Customers' AP Department . Companies are modernizing their AP Department to remove manual task and deciding 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 helpthose organizations in a cost efficient scalable solution website for automating Accounts Receivable .
Benefits of a FinTech Lockbox
Reduced Cost
The primary objective of the FinTech Lockbox would be to lowerfees per transaction and produce an Accounts Receivable automation application to allowbusinesses to rapidly clear cash and facilitate use of your working capital .
Easy payment trail
It is easy to track incoming ePayments from one place. Instead of flipping through remittance emails or going to the vendor portal to get payment data . The AR Lockbox provides you with a single spot for a hold ALL your incoming electronic payments produced for faster cash application .
Removes mail float
Mail float is a term for the time needed for a check here to go from the payer to the payee through the postal service . With the increase in B2B payments electronically , mail float is rapidly becoming a productof the past . The increasing amount of electronic payments adopting FinTech Lockboxes with an essential focus on the fee reduction and speed at which you clear cash and apply it to your working capital .