Are you familiar with the advantages of accounts receivable automation? Conventionally, a bank lockbox has been used by organization Accounts Receivable departments to increase efficiency.
Lockboxes have been around for a while now and much of the conventional bank lockbox's lifespan has been utilized for capturing payment information associated with payments made by check. Big provided this service 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 strategically 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 information back to their customer. Because banks are processing checks and remittance this decreases the clients A/R workforce and increases their efficiency. The price of the bank lockbox is usually a monthly cost along with a per line remittance data processing cost. To process a large amount of checks over time can be expensive with a lockbox.
Today, we see a big change with Accounts Payable Departments paying electronically. This shift to ePayments has elevated the FinTech industry with {solutions| designed with the goal of decreasing business costs of processing incoming payments.
Shortcomings of a Traditional Bank Lockbox
The lockbox can be relatively high priced . Banks normallyearn a monthly fee as well as a per line fee connected withprocessing payment remittance detail .
Lockboxes can contain security concerns . The standard bank lockbox still takes a fair level 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 create a fraudulent check .
Lockboxes don’t connect into your accounting program . Bank lockboxes process your payments and remittance information and thensend you the information . Your personnel still must website key in that information into your ERP to clear the cash .
Traditional Bank Lockboxes Are Causing a predicament for your Customers' AP Department . Organizations are modernizing their AP Department to get rid of manual task and opting to pay their customers 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 supportthose companies in an economical scalable solution for automating Accounts Receivable .
Advantages of a FinTech Lockbox
Reduction Cost
The main goal of the FinTech Lockbox is usually to reducefees per transaction and provide an Accounts Receivable automation application to letcompanies to QUICKLY clear cash and facilitate access to your working capital .
Trouble-free payment trail
It is easy to track incoming ePayments in one location. Rather than flipping through remittance emails or heading to the vendor portal to download payment information . The AR Lockbox gives you a single destination to house All of your incoming electronic payments created for more rapid 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 by way of the postal service . With the increase in B2B payments electronically , mail float is quickly becoming a thingof the past . The increase in electronic payments embracing FinTech Lockboxes with an essential focus on the fee reduction and speed in which you clear cash and apply it to your working capital .