Are you familiar with the benefits of accounts receivable automation? Conventionally, a bank lockbox has been used by company 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 offered this service to improve effectiveness and flow of business transactions simplifying the accounts receivables collection process.
Customers basically leverage the bank lockbox to receive check payments in one consistent location.
Bank lockboxes are purposefully placed in a central location to decrease mail delivery time, which also assists 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 clients A/R workforce and increases their productivity. 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 costly with a lockbox.
Today, we see a big shift with Accounts Payable Departments paying electronically. This shift to ePayments has revolutionized 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 often is relatively high priced . Banks normallyearn a monthly rate in addition to a per line fee related toprocessing payment remittance detail .
Lockboxes can contain security issues . The traditional bank lockbox still requires a fair amount of manual re-keying information . With the majority of manual data entry attendance being entry level-administrative staff who are new to the financial institution or an outsourced contractor . The data from the lockbox gives you all essential components to make a fraudulent check .
Lockboxes don’t tie into your accounting program . Bank lockboxes process your payments and remittance data thenforward you the information . Your team still must enter that data into your ERP to clear the cash .
Commercial Bank Lockboxes Are Creating problems for your Customers' AP Department . Corporations are modernizing their AP Department to get rid of manual process and opting to pay their customers electronically via ACH , Credit Card or vCard . These preferred check here methods of ePayment are generating an increase in email remittance . FinTech solution companies have bridged the gap to helpthose companies in a cost effective scalable alternative for automating Accounts Receivable .
Rewards of a FinTech Lockbox
Reduced Cost
The main objective of the FinTech Lockbox is usually to reducefees per transaction and provide an Accounts Receivable automation application to allowbusinesses to rapidly clear cash and improve use of your working capital .
Easy payment trail
It is simple to track incoming ePayments from one place. Instead of flipping through remittance emails or heading to the vendor portal to get payment information . The AR Lockbox gives you one spot for a house ALL your incoming electronic payments produced 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 by means of the postal service . With the rise in B2B payments electronically , mail float is rapidly turning into a productof the past . The increase in electronic payments choosing FinTech Lockboxes with a significant focus on the price reduction and speed in which you clear cash and apply it to your working capital .