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 many years and a lot of the traditional bank lockbox's life has been used for capturing payment information associated with payments made by check. Mainstream offered this amenity to improve effectiveness and flow of business 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 decrease mail delivery time, which also assists 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 customer. Because banks are processing checks and remittance this decreases the customers A/R workforce and increases their efficiency. The cost of the bank lockbox is usually a monthly fee along with a per line remittance data processing cost. To process a large amount 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.
Downsides of a Traditional Bank Lockbox
The lockbox can be somewhat high priced . Banks typicallyearn a monthly rate in addition to a per line fee related toprocessing payment remittance detail .
Lockboxes may contain security issues . 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 workers who are new to the financial institution accounts receivable solutions or an outsourced service provider . The details from the lockbox gives you all necessary components to create a fraudulent check .
Lockboxes don’t connect into your accounting program . Bank lockboxes process your payments and remittance data and thensend you the information . Your organization still must input that information into your ERP to clear the cash .
Commercial Bank Lockboxes Are Creating issues for your Customers' AP Department . Businesses are modernizing their AP Department to get rid of manual process and deciding to pay their customers electronically via ACH , Credit Card or vCard . These preferred methods of ePayment are generating an increase in email remittance . FinTech solution companies have bridged the gap to assistthose companies in a cost efficient scalable alternative for automating Accounts Receivable .
Benefits of a FinTech Lockbox
Reduction Cost
The main goal of the FinTech Lockbox is usually to lowercost per transaction and supply an Accounts Receivable automation application to letorganizations to QUICKLY clear cash and facilitate access to your working capital .
Trouble-free payment trail
You can easily track incoming ePayments in one location. Instead of flipping through remittance emails or going to the vendor portal to download payment data . The AR Lockbox gives you one place to hold ALL your incoming electronic payments made for quicker cash application .
Gets rid of mail float
Mail float is a term for the time needed for a check to go 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 rise 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 .