Benefits from AR Automation

accounts receivable automation

Do you know the advantages of accounts receivable automation? Traditionally, a bank lockbox has been used by business Accounts Receivable departments to increase efficiency.

Lockboxes have been around for many years and much of the conventional bank lockbox's lifespan has been used for processing payment data associated with payments made by check. Commercial banks offered this service to improve effectiveness and flow of company transactions streamlining the accounts receivables collection process.

Clients basically leverage 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 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 customers 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 large amount 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 industry with {solutions| designed with the goal of decreasing business costs of processing incoming payments.

 

 

Disadvantages of a Traditional Bank Lockbox



The lockbox can be rather expensive . Banks usuallyacquire a monthly rate along with a per line fee connected tohandling payment remittance detail .

Lockboxes may include security concerns . The traditional bank lockbox still requires a fair level of manual re-keying data . With the majority of manual data entry attendance being entry level-administrative personnel who are a novice 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 get rid of manual process check here and deciding to pay their clients electronically via ACH , Credit Card or vCard . These popular methods of ePayment are producing an increase in email remittance . FinTech solution companies have bridged the gap to helpthose companies in a cost efficient scalable solution for automating Accounts Receivable .

 

 

Benefits of a FinTech Lockbox
Reduced Cost


The major goal of the FinTech Lockbox would be to reducepricing per transaction and supply an Accounts Receivable automation tool to accounts receivable automation alloworganizations to QUICKLY clear cash and improve use of your working capital .

Simple payment trail
You can easily track incoming ePayments from one place. Rather than flipping through remittance emails or heading to the vendor portal to get payment information . The AR Lockbox provides you with one spot for a house All of your incoming electronic payments produced for more rapid cash application .
Eliminates mail float
Mail float is a term for the time needed for a check to travel from the payer to the payee from the postal service . With the increase in B2B payments electronically , mail float is swiftly becoming a thingof the past . The improvement in electronic payments adopting FinTech Lockboxes with a significant focus on the price reduction and speed in which you clear cash and apply it to your working capital . check here


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