Are you familiar with the benefits of accounts receivable automation? Conventionally, a bank lockbox has been used by business Accounts Receivable departments to increase efficiency.
Lockboxes have been around for many years and a lot of the conventional bank lockbox's lifespan has been utilized for processing payment data associated with payments made by check. Mainstream provided this benefit to improve effectiveness and flow of company transactions simplifying the accounts receivables collection method.
Clients generally 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 helps with lowering the company’s Days Sales Outstanding (DSO). Banks receive 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 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 costly with a lockbox.
Today, we see a huge change 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.
Shortcomings of a Traditional Bank Lockbox
The lockbox could be fairly costly . Banks typicallyearn a monthly rate in addition to a per line rate connected toprocessing payment remittance detail .
Lockboxes may include security issues . The traditional bank lockbox still requires a decent level of manual re-keying data . With the majority of manual data entry attendance being entry level-administrative personnel who are new to the financial institution or an outsourced contractor . The data from the lockbox can provide all necessary components to produce a fraudulent check .
Lockboxes don’t tie into your accounting system . Bank lockboxes process your payments and remittance information thensend you the information . Your team still must input that data into your ERP to clear the cash .
Traditional Bank Lockboxes Are Creating a predicament for your Customers' AP Department . Corporations are modernizing their AP Department to eradicate manual task and opting to pay their clients electronically via ACH , Credit Card or vCard . These popular methods of ePayment are creating an increase in email remittance . FinTech solution companies have bridged the gap to assistthose businesses in an economical scalable option for automating Accounts Receivable ar lockbox .
Features of a FinTech Lockbox
Reduction Cost
The primary goal of the FinTech Lockbox will be to lowercost per transaction and produce an Accounts Receivable automation application to helporganizations to QUICKLY clear cash and improve use of your working capital .
Easy payment trail
It is easy to track incoming ePayments from one location. Instead of flipping through remittance emails or heading to the vendor portal to download payment information . The AR Lockbox provides you with one destination to hold ALL your incoming electronic payments meant for speedier 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 via the postal service . With the rise in B2B payments electronically , mail float is rapidly becoming a website thingof the past . The improvement in electronic payments using FinTech Lockboxes with an essential focus on the price reduction and speed in which you clear cash and apply it to your working capital .