Are you familiar with the benefits of accounts receivable automation? Conventionally, a bank lockbox has been used by organization Accounts Receivable departments to increase expediency.
Lockboxes have been around for decades and much of the traditional bank lockbox's lifespan has been used for capturing payment data associated with payments made by check. Mainstream provided this amenity to improve effectiveness and flow of company transactions simplifying the accounts receivables collection process.
Clients generally 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 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 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 cost. To process a large number of checks over time can be expensive with a lockbox.
Today, we see a big shift 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.
Pitfalls of a Traditional Bank Lockbox
The lockbox can be rather expensive . Banks typicallyacquire a monthly rate as well as a per line rate connected withhandling payment remittance detail .
Lockboxes can contain 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 staff who are a novice to the financial institution or an outsourced service provider . The details from the lockbox gives you all crucial components to produce a fraudulent check .
Lockboxes don’t tie into your accounting program . more info Bank lockboxes process the payments and remittance data and thenforward you the information . Your personnel still must enter that information into your ERP to clear the cash .
Commercial Bank Lockboxes Are Causing problems for your Customers' AP Department . Corporations are modernizing their AP Department to eliminate manual process and deciding to pay their customers electronically via ACH , Credit Card or vCard . These preferred methods of ePayment are creating an increase in email remittance . FinTech solution companies have bridged the gap to assistthose companies in an economical scalable option for automating Accounts Receivable .
Benefits of a FinTech Lockbox
Reduction Cost
The main goal of the FinTech Lockbox is to decreasefees per transaction and supply an Accounts Receivable automation tool to allowcompanies to rapidly clear cash and facilitate use of your working capital .
Easy payment trail
You can easily track incoming ePayments from one place. Instead of flipping through remittance emails or going to the vendor portal to download payment information . The AR Lockbox gives you one place to hold ALL your incoming electronic payments meant for swifter cash application .
Gets rid of mail float
Mail float is a term for the time needed for a check to go from the payer to the payee via the postal service . With the rise in B2B payments electronically , get more info mail float is quickly becoming a productof the past . The improvement in electronic payments adopting FinTech Lockboxes with a major focus on the cost reduction and speed in which you clear cash and apply it to your working capital .