Are you familiar with the benefits of accounts receivable automation? Traditionally, a bank lockbox has been used by company Accounts Receivable departments to increase expediency.
Lockboxes have been around for many years and a lot of the traditional bank lockbox's lifespan has been used for capturing payment information associated with payments made by check. Commercial banks provided this service 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 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 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 typically a monthly cost along with a per line remittance data processing fee. To process a huge amount of checks over time can be pricey with a lockbox.
Today, we see a big shift with Accounts Payable Departments paying electronically. This change to ePayments has revolutionized the FinTech industry with {solutions| designed with the goal of decreasing business costs of processing incoming payments.
Pitfalls of a Traditional Bank Lockbox
The lockbox is often somewhat high priced . Banks generallyacquire a monthly rate in addition to a per line fee connected toprocessing payment remittance detail .
Lockboxes can contain security concerns . The standard bank lockbox still takes a decent level of manual re-keying data . With the majority of manual data entry attendance being entry level-administrative staff who are a novice get more info to the financial institution or an outsourced contractor . The information from the lockbox gives you all needed components to produce a fraudulent check .
Lockboxes don’t more info connect into your accounting system . Bank lockboxes process your payments and remittance data and thenforward you the information . Your personnel still must enter that information into your ERP to clear the cash .
Financial Institution Lockboxes Are Creating a Problem for your Customers' AP Department . Companies are modernizing their AP Department to get rid of manual process and opting to pay their clients 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 aidthose businesses in an economical scalable alternative for automating Accounts Receivable .
Features of a FinTech Lockbox
Reduced Cost
The major goal of the FinTech Lockbox will be to lowerpricing per transaction and provide an Accounts Receivable automation program to alloworganizations to rapidly clear cash and improve use of your working capital .
Simple payment trail
It is easy to track incoming ePayments in one place. Rather than flipping through remittance emails or heading to the vendor portal to download and read payment information . The AR Lockbox gives you one destination to house ALL your incoming electronic payments made for swifter cash application .
Removes mail float
Mail float is a term for the time required for a check to go from the payer to the payee by means of the postal service . With the rise in B2B payments electronically , mail float is rapidly turning into a thingof the past . The improvement in electronic website payments adopting FinTech Lockboxes with an essential focus on the cost reduction and speed in which you clear cash and apply it to your working capital .