Are you familiar with the benefits of accounts receivable automation? Traditionally, a bank lockbox has been used by organization Accounts Receivable departments to increase expediency.
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. Commercial banks provided this benefit 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 strategically placed in a central location to reduce mail delivery time, which also helps with lowering the business’ Days Sales Outstanding (DSO). Banks receive 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 customers A/R workforce and increases their productivity. The price of the bank lockbox is typically a monthly cost along with a per line remittance data processing cost. To process a huge number of checks over time can be pricey with a lockbox.
Today, we see a drastic change with Accounts Payable Departments paying electronically. This change to ePayments has elevated the FinTech business with {solutions| designed with the goal of decreasing business costs of processing incoming payments.
Pitfalls of a Traditional Bank Lockbox
The lockbox is often relatively expensive . Banks normallyacquire a monthly rate along with a per line fee connected withhandling payment remittance detail .
Lockboxes may include security issues . The standard bank lockbox still takes a decent measure of manual re-keying information . 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 can provide all required components to produce a fraudulent check .
Lockboxes don’t tie into your accounting program . Bank lockboxes process the payments and remittance data and thensend you the information . Your organization still must key in that data into your ERP to clear the cash .
Financial Institution Lockboxes Are Creating a predicament for your Customers' AP Department . Corporations are modernizing their AP Department to remove manual process and deciding to pay their clients electronically via ACH , Credit Card or vCard . more info These popular methods of ePayment are generating an increase in email remittance . FinTech solution businesses have bridged the gap to aidthose corporations in a cost efficient scalable alternative for automating Accounts Receivable .
Advantages of a FinTech Lockbox
Reduced Cost
The major objective of the FinTech Lockbox will be to lowerpricing per transaction and produce an Accounts Receivable automation application to letbusinesses to rapidly clear cash and facilitate access to your working capital .
Easy payment trail
It is simple to track incoming ePayments from one place. Instead of flipping through remittance emails or going to the vendor portal to download payment data . The AR Lockbox provides you with a single destination to hold ALL your incoming electronic payments created for quicker 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 means of the postal service . With the increase in B2B payments electronically , mail float is quickly turning into a productof the past . The rise in electronic payments adopting FinTech Lockboxes with a significant focus on the fee reduction and speed at which you clear cash and apply it to your working capital .