Benefits from AR Automation

accounts receivable automation

Do you know the benefits of accounts receivable automation? Conventionally, a bank lockbox has been used by company 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 provided this amenity to improve effectiveness and flow of business transactions streamlining the accounts receivables collection method.

Clients 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 assists 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 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 typically a monthly fee 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 drastic change with Accounts Payable Departments paying electronically. This change to ePayments has elevated the FinTech business with {solutions| designed with the goal of decreasing business costs of processing incoming payments.

 

 

Weaknesses of a Traditional Bank Lockbox



The lockbox can be somewhat costly . Banks usuallyacquire a monthly fee as well as a per line fee associated withhandling payment remittance detail .

Lockboxes can contain security issues . The standard bank lockbox still takes a fair level of manual re-keying data . With the majority of manual data entry attendance being entry level-administrative personnel who are new to the bank or an outsourced service provider . The information from the lockbox gives you all required components to create a fraudulent check .

Lockboxes don’t tie into your accounting program . Bank lockboxes process the payments and remittance information thensend you the information . Your organization still must enter that information into your ERP to clear the cash .

Traditional Bank Lockboxes Are Creating a Problem for your Customers' AP Department . Organizations are modernizing their AP Department to eliminate manual process and deciding to pay their customers 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 assistthose firms in a cost effective scalable solution for automating Accounts Receivable .

 

 

Benefits of a FinTech Lockbox
Reduced Cost


The main goal of the FinTech Lockbox will be to lowerpricing per transaction and supply an Accounts Receivable automation application to helporganizations to QUICKLY clear cash and improve use of your working capital .

Easy payment trail
It is simple to track incoming ePayments in one place. Instead of flipping through remittance emails or heading to the vendor portal to get payment information . The AR Lockbox gives you a single spot for a hold ALL your incoming electronic payments made for faster cash application .
Gets rid of mail float
Mail float is a term for the time required for a check to go from the payer to the payee by way of the postal service . With the increase in B2B payments electronically , mail float is rapidly turning ar automation solutions into a thingof the past . The rise in electronic payments adopting FinTech Lockboxes with a primary focus on the cost reduction and speed at which you clear cash and apply it to your working capital .


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