Advantages for Accounts Receivable Automation

accounts receivable automation

Are you familiar with the advantages of accounts receivable automation? Conventionally, a bank lockbox has been used by organization Accounts Receivable departments to increase efficiency.

Lockboxes have been around for a while now and much of the conventional bank lockbox's lifespan has been utilized for capturing payment information associated with payments made by check. Commercial banks provided this amenity to improve effectiveness and flow of business transactions simplifying the accounts receivables collection process.

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 business’ 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 customers A/R workforce and increases their efficiency. The price of the bank lockbox is usually a monthly fee along with a per line remittance data processing fee. To process a large number of checks over time can be costly with a lockbox.

Today, we see a drastic change with Accounts Payable Departments paying electronically. This shift to ePayments has elevated the FinTech industry with {solutions| designed with the goal of decreasing business costs of processing incoming payments.

 

 

Weaknesses of a Traditional Bank Lockbox



The lockbox can be fairly costly . Banks normallyearn a monthly fee as well as a per line fee connected withhandling payment remittance detail .

Lockboxes can include security concerns . The standard bank lockbox still requires a decent amount of manual re-keying information . With the majority of manual data entry attendance being entry level-administrative employees who are a novice to the bank or an outsourced contractor . The information from the lockbox can provide all essential elements to generate a more info fraudulent check .

Lockboxes don’t tie into your accounting system . Bank lockboxes process the payments and remittance information thensend you the information . Your personnel still must key in that information into your ERP to clear the cash .

Commercial Bank Lockboxes Are Causing a Problem for your Customers' AP Department . Companies are modernizing their AP Department to remove manual process and preferring to pay their clients electronically via ACH , Credit Card or vCard . These popular methods of ePayment are creating an increase in email remittance . FinTech solution companies have bridged the gap to helpthose businesses in a cost effective scalable solution for automating Accounts Receivable .

 

 

Benefits of a FinTech Lockbox
Reduction Cost


The primary objective of the FinTech Lockbox would be to reducefees per transaction and provide an Accounts Receivable automation application to alloworganizations to QUICKLY clear cash and facilitate use of your working capital .

Simple payment trail
It is simple to track incoming ePayments in one location. Instead of flipping through remittance emails or heading to the vendor portal to get payment information . The AR Lockbox gives you a single place to hold All of your incoming electronic payments made for swifter cash application .
Removes mail float
Mail float is a term for the time needed for a check to go from the payer to the payee by way of the postal service . With the increase in B2B payments electronically , mail float is swiftly turning into a thingof the past . The increasing amount of electronic payments choosing FinTech Lockboxes with a primary focus on the cost reduction and speed in which you clear cash and apply it to your working capital .


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