Are you aware of the advantages of accounts receivable automation? Traditionally, a bank lockbox has been used by business Accounts Receivable departments to increase efficiency.
Lockboxes have been around for many years and much of the traditional bank lockbox's life has been used for processing payment data associated with payments made by check. Mainstream provided this amenity to improve effectiveness and flow of business transactions streamlining the accounts receivables collection process.
Customers basically leverage 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 assists 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 customers A/R workforce and increases their efficiency. The price of the bank lockbox is typically a monthly cost along with a per line remittance data processing cost. To process a huge amount of checks over time can be pricey with a lockbox.
Today, we see a huge change with Accounts Payable Departments paying electronically. This shift to ePayments has revolutionized the FinTech business with {solutions| designed with the goal of decreasing business costs of processing incoming payments.
Weaknesses of a Traditional Bank Lockbox
The lockbox often is relatively costly . Banks generallyearn a monthly rate in addition to a per line fee connected withprocessing payment remittance detail .
Lockboxes can contain security concerns . The standard bank lockbox still requires a fair level of manual re-keying data . With the majority of manual data entry attendance being entry level-administrative employees who are new to the bank or an outsourced service provider . The data from the lockbox can provide all needed components to create 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 personnel still must key in that information into your ERP to clear the cash .
Financial Institution Lockboxes Are Creating problems for your Customers' AP Department . Businesses are modernizing their AP Department to eliminate manual task and deciding to pay their customers electronically via ACH , Credit Card or vCard . These desired methods of ePayment are producing an increase in email remittance . FinTech solution companies have bridged the gap to helpthose firms in an economical scalable option for automating Accounts Receivable .
Rewards of a FinTech Lockbox
Reduced Cost
The major goal of the FinTech Lockbox is to reducefees per transaction and provide an Accounts Receivable automation tool to letcompanies to rapidly clear website cash and improve access to your working capital .
Easy payment trail
It is simple 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 provides you with a single spot for a house ALL your incoming electronic payments meant for swifter cash application .
Gets rid of mail float
Mail float website is a term for the time required 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 swiftly becoming a thingof the past . The rise in electronic payments adopting FinTech Lockboxes with a major focus on the cost reduction and speed at which you clear cash and apply it to your working capital .