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 decades and much of the traditional bank lockbox's lifespan has been utilized for processing payment data associated with payments made by check. Mainstream offered this benefit to improve effectiveness and flow of business transactions simplifying 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 receive 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 efficiency. The price of the bank lockbox is usually a monthly fee along with a per line remittance data processing fee. To process a huge amount of checks over time can be pricey with a lockbox.
Today, we see a huge 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.
Disadvantages of a Traditional Bank Lockbox
The lockbox is often rather costly . Banks generallyacquire a monthly rate along with a per line fee connected withhandling payment remittance detail .
Lockboxes may include security concerns . The traditional bank lockbox still requires 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 information from the lockbox provides all crucial elements to make a fraudulent check .
Lockboxes don’t connect into your accounting program . Bank lockboxes process the payments and remittance information thenforward you the information . Your organization still must key in that data into your ERP to clear more info the cash .
Standard Bank Lockboxes Are Causing read more a Problem for your Customers' AP Department . Companies are modernizing their AP Department to eradicate manual task and deciding to pay their clients electronically via ACH , Credit Card or vCard . These popular methods of ePayment are generating an increase in email remittance . FinTech solution businesses have bridged the gap to supportthose businesses in a cost effective scalable alternative for automating Accounts Receivable .
Rewards of a FinTech Lockbox
Reduction Cost
The major objective of the FinTech Lockbox is usually to decreasecost per transaction and provide an Accounts Receivable automation program to letbusinesses to QUICKLY clear cash and facilitate access to your working capital .
Simple payment trail
It is simple to track incoming ePayments in one location. Rather than flipping through remittance emails or going to the vendor portal to download and read payment information . The AR Lockbox gives you a single destination to house All of your incoming electronic payments produced for more rapid check here cash application .
Eliminates mail float
Mail float is a term for the time needed for a check to travel from the payer to the payee through the postal service . With the increase in B2B payments electronically , mail float is rapidly becoming a thingof the past . The rise in electronic payments adopting FinTech Lockboxes with a significant focus on the price reduction and speed in which you clear cash and apply it to your working capital .