Are you familiar with 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 lifespan has been utilized for capturing payment data associated with payments made by check. Big provided 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 purposefully 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 information back to their client. 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 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 change to ePayments has elevated the FinTech trade with {solutions| designed with the goal of decreasing business costs of processing incoming payments.
Weaknesses of a Traditional Bank Lockbox
The lockbox is often relatively high priced . Banks generallyearn a monthly rate in addition to a per line fee linked toprocessing payment remittance detail .
Lockboxes can include security concerns . The standard bank lockbox still requires a decent measure of manual re-keying data . With the majority of manual data entry attendance being entry level-administrative workers who are new to the bank or an outsourced service provider . The details from the lockbox provides all essential components to make a fraudulent check . read more
Lockboxes don’t connect into your accounting program . Bank lockboxes process your payments and remittance information thensend you the information . Your personnel still must input that data into your ERP to clear the cash .
Traditional Bank Lockboxes Are Causing difficulty for your Customers' AP Department . Businesses are modernizing their AP Department to remove manual process and opting to pay their clients electronically via ACH , Credit Card or vCard . These preferred methods of ePayment are creating an increase in email remittance . FinTech solution businesses have bridged the gap to helpthose corporations in an economical scalable alternative for automating Accounts Receivable .
Benefits of a FinTech Lockbox
Reduction Cost
The primary goal of the FinTech Lockbox will be to decreasepricing per transaction and provide an Accounts Receivable automation application to helpbusinesses to QUICKLY clear cash and facilitate use of your working capital .
Easy payment trail
It is easy to track incoming ePayments in one place. Instead of flipping through remittance emails or going to the vendor portal to download and read payment data . The AR Lockbox provides you with one place to hold All of your incoming electronic payments meant for quicker cash application .
Removes 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 swiftly becoming a productof the past . The increase in electronic payments embracing FinTech Lockboxes with a primary focus on the cost reduction and speed at which you clear cash and apply it to your working capital .