Are you familiar with the advantages of accounts receivable automation? Traditionally, a bank lockbox has been used by business Accounts Receivable departments to increase expediency.
Lockboxes have been around for a while now and a lot of the traditional bank lockbox's lifespan has been used for capturing payment data associated with payments made by check. Commercial banks offered this benefit to improve effectiveness and flow of company transactions streamlining the accounts receivables collection method.
Customers generally use 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 get 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 efficiency. The cost of the bank lockbox is typically a monthly fee along with a per line remittance data processing cost. To process a huge number of checks over time can be expensive with a lockbox.
Today, we see a drastic shift with Accounts Payable Departments paying electronically. This shift to ePayments has revolutionized the FinTech business with {solutions| designed with the goal of decreasing business costs of processing incoming payments.
Drawbacks of a Traditional Bank Lockbox
The lockbox is often somewhat high priced . Banks typicallyearn a monthly rate along with a click here per line rate linked tohandling payment remittance detail .
Lockboxes may include security issues . The traditional bank lockbox still requires a fair amount of manual re-keying data . With the majority of manual data entry attendance being entry level-administrative employees who are a novice to the financial institution or an outsourced service provider . The data from the lockbox gives you all essential elements to generate a fraudulent check .
Lockboxes don’t tie into your accounting system . Bank lockboxes process the payments and remittance information thenforward you the information . Your organization still must key in that information into your ERP to clear the cash .
Financial Institution Lockboxes Are Creating problems 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 preferred methods of ePayment are generating an increase in email remittance . FinTech solution companies have bridged the gap to aidthose companies in a cost effective scalable option for automating Accounts Receivable .
Advantages of a FinTech Lockbox
Reduction Cost
The major objective of the FinTech Lockbox would be to lowerfees per transaction and provide an Accounts Receivable automation program to permitorganizations to QUICKLY clear cash and facilitate access to your working capital .
Easy payment trail
It is simple to track incoming ePayments in one location. 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 spot for a house All of your incoming electronic payments created for swifter cash application .
Removes mail float
Mail float here is a term for the time needed for a check to travel from the payer to the payee by way of the postal service . With the increase in B2B payments electronically , mail float is rapidly turning into a productof the past . The improvement in electronic payments using FinTech Lockboxes with a major focus on the cost reduction and speed in which you clear cash and apply it to your working capital .