Are you familiar with the benefits of accounts receivable automation? Conventionally, a bank lockbox has been used by business Accounts Receivable departments to increase efficiency.
Lockboxes have been around for many years and a lot of the conventional bank lockbox's lifespan 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 method.
Customers basically leverage the bank lockbox to receive check payments in one consistent location.
Bank lockboxes are strategically placed in a central location to decrease mail delivery time, which also helps with lowering the business’ 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 customers A/R workforce and increases their efficiency. The cost of the bank lockbox is usually a monthly cost along with a per line remittance data processing fee. To process a large amount of checks over time can be pricey with a lockbox.
Today, we see a drastic change with Accounts Payable Departments paying electronically. This change to ePayments has revolutionized the FinTech industry with {solutions| designed with the goal of decreasing business costs of processing incoming payments.
Drawbacks of a Traditional Bank Lockbox
The lockbox is usually relatively costly . Banks commonlyacquire a monthly rate along with a per line fee linked toprocessing payment remittance detail .
Lockboxes can include security issues . The standard bank lockbox still takes a decent measure of manual re-keying information . With the majority of manual data entry attendance being entry level-administrative employees who are a novice to the bank or an outsourced service provider . The data from the lockbox can provide all needed components to generate a fraudulent check .
Lockboxes don’t connect into your accounting program . Bank lockboxes process your payments and remittance data and thenforward you the information . Your organization still must key click here in that information into your ERP to clear the cash .
Financial Institution Lockboxes Are Creating problems for your Customers' AP Department . Corporations are modernizing their AP Department to eliminate manual task and opting 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 companies have bridged the gap to helpthose companies in a cost effective scalable option for automating Accounts Receivable .
Advantages of a FinTech Lockbox
Reduction Cost
The major goal of the FinTech Lockbox is to lowercost per transaction and produce an Accounts Receivable automation application to allowbusinesses to QUICKLY clear cash and facilitate use of your working capital .
Simple payment trail
It is easy to track incoming ePayments in one location. Rather than flipping through remittance emails or going to the vendor portal to download and read payment data . The AR Lockbox provides you with a single location to hold All of your incoming electronic payments created for faster cash application .
Removes mail float
Mail float is a term for the time needed for a check to travel from the payer to the payee by way of the postal service . With the rise in B2B payments electronically , mail float is quickly becoming a productof the past . The increase in electronic payments using FinTech Lockboxes with a significant focus on the cost reduction and speed at which you clear cash and apply it to your working capital .