Aspects of AR Automation

accounts receivable automation

Are you familiar with the benefits of accounts receivable automation? Traditionally, a bank lockbox has been used by business Accounts Receivable departments to increase expediency.

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

Customers basically leverage 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 company’s 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 clients A/R workforce and increases their productivity. The cost of the bank lockbox is typically a monthly fee along with a per line remittance data processing cost. To process a huge amount of checks over time can be costly with a lockbox.

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

 

 

Pitfalls of a Traditional Bank Lockbox



The lockbox is usually relatively high priced . Banks commonlyacquire a monthly fee along with a per line rate linked toprocessing payment remittance detail .

Lockboxes may include security issues . The traditional bank lockbox still takes a fair level of manual re-keying information . With the majority of manual data entry attendance being entry level-administrative staff who are new to the financial institution or an outsourced service provider . The details from the lockbox can provide all required components to create a fraudulent check .

Lockboxes don’t connect into your accounting program . Bank lockboxes process the payments and remittance data thenforward you the information . Your team still must input that data into your ERP to clear the cash .

Traditional Bank Lockboxes Are Causing a predicament for your Customers' AP Department . Businesses are modernizing their AP Department to get rid of manual task and preferring to pay their customers electronically via ACH , Credit Card or vCard . These popular methods of ePayment are generating an increase in email remittance . FinTech solution companies have bridged the gap to assistthose organizations in an economical scalable option for automating Accounts Receivable .

 

 

Advantages of a FinTech Lockbox
Reduced Cost


The major objective of the FinTech Lockbox will be to lowerpricing per transaction and produce an Accounts Receivable automation application to letbusinesses to QUICKLY clear cash and improve use of your working capital .

Simple payment trail
It is simple to track incoming ePayments in one place. Rather than flipping read more through remittance emails or going to the vendor portal to download payment information . The AR Lockbox provides you with a single location to house ALL your incoming electronic payments created 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 increase in B2B payments electronically , mail float is swiftly becoming a productof the past . The rise in electronic payments choosing FinTech Lockboxes with a significant focus on the fee reduction and speed in which you clear cash and apply it to your working capital .


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