Are you familiar with 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 a while now and a lot of the traditional bank lockbox's life has been utilized for capturing payment data associated with payments made by check. Mainstream offered this service to improve effectiveness and flow of business transactions simplifying the accounts receivables collection process.
Clients 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 company’s Days Sales Outstanding (DSO). Banks receive the paper check, process it along with the remittance data and send the information back to their customer. 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 fee along with a per line remittance data processing fee. To process a huge 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 trade with {solutions| designed with the goal of decreasing business costs of processing incoming payments.
Disadvantages of a Traditional Bank Lockbox
The lockbox could be relatively expensive . Banks normallyacquire a monthly rate along with a per line fee associated withhandling payment remittance detail .
Lockboxes can contain security issues . The traditional bank lockbox still requires a decent amount of manual re-keying data . With the majority of manual data entry attendance being entry level-administrative employees who are new to the financial institution or an outsourced service provider . The data from the lockbox can provide all necessary components to make a fraudulent check .
Lockboxes don’t connect into your accounting program . Bank lockboxes process the payments and remittance data and thenforward you the information . Your personnel still must key in that data into your ERP to clear the cash .
Commercial Bank Lockboxes Are Creating difficulty for your Customers' AP Department . Organizations are modernizing their AP Department to remove manual task and deciding to pay their clients electronically via ACH , Credit Card or vCard . These desired methods read more of ePayment are creating an increase in email remittance . FinTech solution businesses have bridged the gap to servethose firms in a cost efficient scalable solution for automating Accounts Receivable .
Benefits of a FinTech Lockbox
Reduced Cost
The primary objective of the FinTech Lockbox is usually to reducepricing per transaction and supply an Accounts Receivable automation program to letcompanies to rapidly clear cash and improve use of your working capital .
Easy payment trail
It is easy to track incoming ePayments in one location. Rather than flipping through remittance emails or heading to the vendor portal to download payment information . The AR Lockbox gives you a single place to hold All of your incoming electronic payments produced 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 through the postal service . With the increase in B2B payments electronically , mail float is swiftly becoming a productof the past . The increasing amount of electronic payments using FinTech Lockboxes check here with a significant focus on the price reduction and speed in which you clear cash and apply it to your working capital .