Are you familiar with the advantages of accounts receivable automation? Traditionally, a bank lockbox has been used by business Accounts Receivable departments to increase efficiency.
Lockboxes have been around for decades and a lot of the conventional bank lockbox's life has been utilized for capturing payment information associated with payments made by check. Commercial banks offered this benefit to improve effectiveness and flow of business transactions simplifying the accounts receivables collection process.
Customers basically leverage the bank lockbox to receive check payments in one consistent location.
Bank lockboxes are purposefully placed in a central location to reduce mail delivery time, which also helps with lowering the business’ Days Sales Outstanding (DSO). Banks get the paper check, process it along with the remittance data and send the information back to their client. Because banks are processing checks and remittance this decreases the customers A/R workforce and increases their productivity. The price of the bank lockbox is usually a monthly fee along with a per line remittance data processing cost. 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 shift to ePayments has revolutionized the FinTech business with {solutions| designed with the goal of decreasing business costs of processing incoming payments.
Shortcomings of a Traditional Bank Lockbox
The lockbox is often rather expensive . Banks usuallyacquire a monthly fee along with a per line rate associated withprocessing payment remittance detail .
Lockboxes may include security concerns . The traditional bank lockbox still takes a decent amount 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 or an outsourced service provider . The data from the lockbox can provide all vital components to make a fraudulent check .
Lockboxes don’t connect into your accounting system . Bank lockboxes process your payments and remittance data thensend you the information . Your personnel still must enter that information into your ERP to clear the cash .
Financial Institution Lockboxes Are Creating a predicament for your Customers' AP Department . Corporations are modernizing their AP Department to remove manual task website 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 aidthose businesses in an economical scalable solution for automating Accounts Receivable .
Benefits of a FinTech Lockbox
Reduced Cost
The main goal of the FinTech Lockbox would be to decreasecost per transaction and produce an Accounts Receivable automation application to allowcompanies to rapidly clear cash and improve access to your working capital .
Simple payment trail
It is easy to track incoming ePayments in one place. Instead of flipping through remittance emails or heading to the vendor portal to download payment information . The AR Lockbox provides you with one spot for a hold All of your incoming electronic payments created for quicker 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 via the postal service . With the increase in B2B payments electronically , mail float is swiftly turning into a productof the past . The rise in electronic payments using FinTech Lockboxes with a significant focus on the rate reduction and speed in which you clear cash and apply it to your working capital .