Important things about Accounts Receivable Automation

accounts receivable automation

Are you familiar with the advantages of accounts receivable automation? Conventionally, a bank lockbox has been used by organization Accounts Receivable departments to increase efficiency.

Lockboxes have been around for a while now and much of the conventional bank lockbox's life has been utilized for processing 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.

Customers generally 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 business’ Days Sales Outstanding (DSO). Banks receive 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 customers A/R workforce and increases their productivity. The price of the bank lockbox is typically a monthly cost 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 drastic change with Accounts Payable Departments paying electronically. This shift to ePayments has revolutionized the FinTech industry with {solutions| designed with the goal of decreasing business costs of processing incoming payments.

Shortcomings of a Traditional Bank Lockbox



The lockbox is usually somewhat costly . Banks normallyacquire a monthly rate in addition to a per line fee related tohandling payment remittance detail .

Lockboxes may include security concerns . 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 personnel who are a novice to the bank or an outsourced contractor . The data from the lockbox gives you all essential elements to produce a fraudulent check .

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

Financial Institution Lockboxes Are Creating a Problem for your Customers' AP Department . Corporations are modernizing their AP Department to get rid check here of manual task and preferring to pay their customers electronically via ACH , Credit Card or vCard . These popular methods of ePayment are producing an increase in email remittance . FinTech solution businesses have bridged the gap to aidthose firms in a cost efficient scalable solution for automating Accounts Receivable .

Benefits of a FinTech Lockbox
Reduction Cost


The main goal of the FinTech Lockbox is to reducepricing per transaction and supply an Accounts Receivable automation tool to allowcompanies to rapidly clear cash and facilitate use of your working capital .

Easy payment trail
It is simple to track incoming ePayments in one location. Rather than flipping through remittance check here emails or heading to the vendor portal to download and read payment data . The AR Lockbox provides you with one destination to house All of your incoming electronic payments produced for faster cash application .
Gets rid of mail float
Mail float is a term for the time needed for a check here 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 quickly becoming a thingof the past . The improvement in electronic payments choosing FinTech Lockboxes with a major focus on the cost reduction and speed at which you clear cash and apply it to your working capital .


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