Are you aware of the benefits of accounts receivable automation? Traditionally, a bank lockbox has been used by organization 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 processing payment information associated with payments made by check. Mainstream provided this amenity to improve effectiveness and flow of company transactions simplifying the accounts receivables collection process.
Clients generally use 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 company’s Days Sales Outstanding (DSO). Banks get 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 productivity. The price of the bank lockbox is typically a monthly fee along with a per line remittance data processing fee. To process a huge number of checks over time can be expensive with a lockbox.
Today, we see a huge change with Accounts Payable Departments paying electronically. This shift to ePayments has revolutionized the FinTech industry with {solutions| designed with the goal of decreasing business costs of processing incoming payments.
Drawbacks of a Traditional Bank Lockbox
The lockbox is usually relatively expensive . Banks commonlyacquire a monthly fee along with a per line fee connected withhandling payment remittance detail .
Lockboxes may include security issues . The standard bank lockbox still requires a fair amount of manual re-keying data . With the majority of manual data entry attendance being entry level-administrative personnel who are a novice website to the financial institution or an outsourced service provider . The data from the lockbox can provide all needed components to produce a fraudulent check .
Lockboxes don’t tie into your accounting system . Bank lockboxes process your payments and remittance data and thenforward you the information . Your personnel still must enter that data into your ERP to clear the cash .
Standard Bank Lockboxes Are Causing issues for your Customers' AP Department . Businesses are modernizing their AP Department to eliminate manual task and opting to pay their customers electronically via ACH , Credit Card or vCard . These popular methods of ePayment are generating an increase in email remittance . FinTech solution companies have ar lockbox bridged the gap to aidthose firms in a check here cost efficient scalable alternative for automating Accounts Receivable .
Features of a FinTech Lockbox
Reduced Cost
The main objective of the FinTech Lockbox is usually to reducepricing per transaction and provide an Accounts Receivable automation program to permitcompanies to QUICKLY clear cash and facilitate access to your working capital .
Simple payment trail
It is easy to track incoming ePayments in one place. Instead of flipping through remittance emails or heading to the vendor portal to download payment data . The AR Lockbox gives you one spot for a hold All of your incoming electronic payments meant for faster cash application .
Removes mail float
Mail float is a term for the time required for a check to travel from the payer to the payee by way of the postal service . With the rise in B2B payments electronically , mail float is swiftly turning into a thingof the past . The increase in electronic payments using FinTech Lockboxes with a major focus on the rate reduction and speed in which you clear cash and apply it to your working capital .