Are you familiar with the benefits of accounts receivable automation? Conventionally, a bank lockbox has been used by company Accounts Receivable departments to increase expediency.
Lockboxes have been around for decades and much of the conventional bank lockbox's life has been used for capturing payment data associated with payments made by check. Commercial banks provided this service to improve effectiveness and flow of company transactions simplifying the accounts receivables collection process.
Customers basically use 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 business’ Days Sales Outstanding (DSO). Banks get 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 number of checks over time can be costly 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.
Shortcomings of a Traditional Bank Lockbox
The lockbox is usually rather costly . Banks generallyacquire a monthly rate as well as a per line fee linked toprocessing payment remittance detail .
Lockboxes can include security concerns . The standard bank lockbox still takes a fair measure of manual click here re-keying data . With the majority of manual data entry attendance being entry level-administrative employees who are new to the bank or an outsourced contractor . The data from the lockbox gives you all necessary elements to create a fraudulent check .
Lockboxes don’t tie into your accounting system . Bank lockboxes process your payments and remittance information thenforward you the information . Your personnel still must enter that data into your ERP to clear the cash .
Standard Bank Lockboxes Are accounts receivable solutions Causing issues for your Customers' AP Department . Businesses are modernizing their AP Department to remove manual task and opting to pay their customers electronically via ACH , Credit Card or vCard . These desired methods of ePayment are creating an increase in email remittance . FinTech solution companies have bridged the gap to helpthose businesses in an economical scalable alternative for automating Accounts Receivable .
Features of a FinTech Lockbox
Reduction Cost
The major goal of the FinTech Lockbox will be to decreasecost per transaction and produce an Accounts Receivable automation application to helpbusinesses to QUICKLY clear cash and facilitate use of your working capital .
Simple payment trail
You can easily track incoming ePayments from one location. Rather than flipping through remittance emails or heading to the vendor portal to get payment information . The AR Lockbox gives you a single location to hold ALL your incoming electronic payments produced for quicker cash application .
Gets rid of mail float
Mail float is a term for the time required 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 quickly becoming a thingof the past . The improvement in electronic payments using FinTech Lockboxes with a significant focus on the cost reduction and speed in which you clear cash and apply it to your working capital .