Reasons for Accounts Receivable Automation

accounts receivable automation

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

Lockboxes have been around for decades and much of the conventional bank lockbox's life has been utilized for processing payment information associated with payments made by check. Big provided this amenity to improve effectiveness and flow of business transactions simplifying the accounts receivables collection method.

Clients basically 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 company’s 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 clients A/R workforce and increases their efficiency. The price of the bank lockbox is usually a monthly cost along with a per line remittance data processing fee. To process a large number of checks over time can be expensive with a lockbox.

Today, we see a drastic 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.

 

 

Drawbacks of a Traditional Bank Lockbox



The lockbox is usually rather expensive . Banks normallyacquire a monthly fee along with a per line rate related tohandling payment remittance detail .

Lockboxes can include security concerns . The traditional bank lockbox still takes a fair measure of manual re-keying information . With the majority of manual data entry attendance being entry level-administrative personnel who are new to the bank or an outsourced contractor . The details from the lockbox can provide all essential components to make a fraudulent check .

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

Traditional Bank Lockboxes Are Creating issues for your Customers' AP Department . Corporations are modernizing their AP Department to get rid of manual process and opting to pay their clients electronically via ACH , Credit Card or vCard . These popular methods of ePayment are creating an increase in email remittance . FinTech solution companies have bridged the gap to aidthose businesses in a cost efficient scalable option for automating Accounts Receivable .

 

 

Benefits of a FinTech Lockbox
Reduction Cost


The primary objective of the FinTech Lockbox will be to lowerpricing per transaction and produce an Accounts Receivable automation application to letbusinesses to QUICKLY clear cash and facilitate use of your working capital .

Simple payment trail
You can easily track incoming ePayments from one place. Rather than flipping through remittance emails or going to the vendor portal to download payment information . The AR Lockbox gives you a single destination to house All of your incoming electronic payments more info created for more rapid cash application .
Eliminates mail float
Mail float is a term for the time needed for a check to travel from the payer to the payee from the postal service . With the increase in B2B payments electronically , mail float is swiftly becoming a thingof the past . The improvement in electronic payments using FinTech Lockboxes with a primary focus on the fee reduction and speed in which you clear cash and apply it to your working capital .


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