Advantages of Accounts Receivable Automation

accounts receivable automation

Are you aware of 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 a while now and much of the conventional bank lockbox's lifespan has been utilized for processing payment information associated with payments made by check. Mainstream provided this service to improve effectiveness and flow of company 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 customer. Because banks are processing checks and remittance this decreases the clients A/R workforce and increases their efficiency. 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 costly with a lockbox.

Today, we see a drastic change 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.

 

 

Downsides of a Traditional Bank Lockbox



The lockbox is usually rather high priced . Banks typicallyearn a monthly rate as well as a per line fee associated get more info withhandling payment remittance detail .

Lockboxes may contain security concerns . The standard bank lockbox still takes a fair amount of manual re-keying information . With the majority of manual data entry attendance being entry level-administrative staff who are new to the bank or an outsourced service provider . The details from the lockbox gives you all vital components to make a fraudulent check .

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

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

 

 

Pros of a FinTech Lockbox
Reduction Cost


The major goal of the FinTech Lockbox will be to reducefees per transaction and provide an Accounts Receivable automation application to helpbusinesses to rapidly clear cash and improve access to your working capital .

Trouble-free payment trail
You can easily track incoming ePayments in one location. Rather than flipping through remittance emails or going to the vendor portal to download and read payment information . The AR Lockbox gives you one spot for a house All of your incoming electronic payments meant for more rapid cash application .
Gets rid of mail float
Mail float is a term for the time needed for a check to travel from the payer to the payee by way of the postal service . With the rise in B2B payments electronically , mail float is quickly becoming a productof the past . The improvement in electronic payments adopting FinTech Lockboxes with an essential focus on the fee reduction and speed in which you clear cash and apply it to your working capital .


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