Are you aware of 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 a while now and much of the traditional bank lockbox's lifespan has been used for capturing payment data associated with payments made by check. Commercial banks provided this benefit to improve effectiveness and flow of business transactions streamlining the accounts receivables collection method.
Customers 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 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 cost of the bank lockbox is usually a monthly fee along with a per line remittance data processing fee. To process a large number 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.
Shortcomings of a Traditional Bank Lockbox
The lockbox is often rather expensive . Banks typicallyearn a monthly fee in addition to a per line rate related toprocessing payment remittance detail .
Lockboxes may include security issues . The standard bank lockbox still takes a fair amount of manual re-keying data . 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 vital components to generate a fraudulent check .
Lockboxes don’t tie into your accounting system . Bank lockboxes process your payments and remittance data thenforward you the information . Your personnel still must enter that data into your ERP to clear the cash .
Standard Bank Lockboxes Are Causing a Problem for your Customers' AP Department . Businesses are modernizing their AP Department to get rid of manual process and deciding to pay their clients electronically via ACH , Credit Card or vCard . These desired methods of ePayment are creating an increase in email remittance . FinTech solution businesses have bridged the gap to servethose corporations in an economical scalable alternative for automating Accounts Receivable .
Features of click here a FinTech Lockbox
Reduced Cost
The main objective of the FinTech Lockbox will be to reducepricing per transaction and supply an Accounts Receivable automation program to permitorganizations to QUICKLY clear cash and facilitate access to your working capital .
Simple payment trail
You can easily track incoming ePayments in one location. Instead of flipping through remittance emails or heading to the vendor portal to get payment information . The AR Lockbox provides you with one spot for a hold All of your incoming electronic payments produced for faster cash application .
Removes mail float
Mail float is a term for the time needed 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 becoming a productof the past . The increasing amount of electronic payments choosing FinTech Lockboxes with an essential focus on the price reduction and speed at which you clear cash and apply it to your working capital .