Are you familiar with the advantages of accounts receivable automation? Conventionally, a bank lockbox has been used by business Accounts Receivable departments to increase expediency.
Lockboxes have been around for many years and a lot of the traditional 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 company 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 helps 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 customers A/R workforce and increases their efficiency. 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 pricey with a lockbox.
Today, we see a big shift with Accounts Payable Departments paying electronically. This shift to ePayments has elevated the FinTech business with {solutions| designed with the goal of decreasing business costs of processing incoming payments.
Drawbacks of a Traditional Bank Lockbox
The lockbox often is somewhat costly . Banks typicallyacquire a monthly fee along with a per line fee associated withhandling payment remittance detail .
Lockboxes can include security issues . The traditional here bank lockbox still takes a fair amount of manual re-keying information . With the majority of manual data entry attendance being entry level-administrative workers who are a novice to the financial institution or an outsourced service provider . The details from the lockbox gives you all vital components to make a fraudulent check .
Lockboxes don’t tie into your accounting program . Bank lockboxes process your payments and remittance data and thensend you the information . Your organization still must enter that data into your ERP to clear the cash .
Financial Institution Lockboxes Are Creating a Problem for your Customers' AP Department . Companies are modernizing their AP Department to get rid of manual process and preferring 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 corporations in a cost effective scalable option for automating Accounts Receivable .
Pros of a FinTech Lockbox
Reduced Cost
The primary objective of the FinTech Lockbox is usually to decreasepricing per transaction and supply an Accounts Receivable automation tool to helpbusinesses to QUICKLY clear cash and facilitate access to your working capital .
Simple payment trail
You can easily track incoming ePayments from 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 place to hold All of your incoming electronic payments produced for more rapid cash application .
Eliminates 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 here B2B payments electronically , mail float is rapidly turning into a thingof the past . The increase in electronic payments choosing FinTech Lockboxes with an essential focus on the fee reduction and speed in which you clear cash and apply it to your working capital .