Are you familiar with the advantages of accounts receivable automation? Conventionally, a bank lockbox has been used by business 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 utilized for capturing payment information associated with payments made by check. Commercial banks provided this benefit to improve effectiveness and flow of business transactions streamlining the accounts receivables collection method.
Clients basically 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 client. Because banks are processing checks and remittance this decreases the clients A/R workforce and increases their efficiency. The cost of the bank lockbox is typically a monthly cost along with a per line remittance data processing fee. To process a huge number of checks over time can be costly with a lockbox.
Today, we see a huge 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 is often relatively expensive . Banks normallyacquire a monthly rate along with a per line fee associated withhandling payment remittance detail .
Lockboxes may include security issues . The traditional bank lockbox still takes a decent level of manual re-keying information . With the majority of manual data ar automation solutions entry attendance being entry level-administrative staff who are a novice to the bank or an outsourced contractor . The information from the lockbox provides all required elements to produce a fraudulent check .
Lockboxes don’t tie into your accounting system . Bank lockboxes process your payments and remittance data and thensend you the information . Your organization still must key in that information into your ERP to clear the cash .
Commercial Bank Lockboxes Are Causing problems for your Customers' AP Department . Organizations are modernizing their AP Department to eliminate manual task and deciding to pay their clients electronically via ACH , Credit Card or vCard . These preferred methods of ePayment are creating an increase in email remittance . FinTech solution businesses have bridged the gap to assistthose businesses in a cost effective scalable solution for automating Accounts Receivable .
Features of a FinTech Lockbox
Reduction Cost
The primary objective of the FinTech Lockbox is usually to decreasepricing per transaction and provide an Accounts Receivable automation program to letbusinesses to QUICKLY clear cash and facilitate use of your working capital .
Simple payment trail
It is easy to track incoming ePayments in one location. Instead of flipping through remittance emails or going to the vendor portal to download payment information . The AR Lockbox gives you a single destination to hold All of your incoming electronic payments produced for quicker cash application .
Removes mail float
Mail float is a term for the time needed for a check to travel from the payer to the payee through the postal service . With the rise in B2B payments electronically , mail float is swiftly turning into a thingof the past . The improvement in electronic payments using FinTech Lockboxes with a primary focus on the cost reduction and speed in which you clear cash and apply it to your working capital .