Benefits of Accounts Receivable Automation

accounts receivable automation

Are you aware of the benefits of accounts receivable automation? Conventionally, a bank lockbox has been used by organization Accounts Receivable departments to increase expediency.

Lockboxes have been around for decades and a lot of the traditional bank lockbox's life has been used for capturing payment data associated with payments made by check. Mainstream 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 purposefully placed in a central location to decrease mail delivery time, which also assists with lowering the business’ Days Sales Outstanding (DSO). Banks receive 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 productivity. The price of the bank lockbox is usually a monthly cost along with a per line remittance data processing fee. To process a huge number of checks over time can be costly with a lockbox.

Today, we see a drastic change with Accounts Payable Departments paying electronically. This change to ePayments has elevated the FinTech trade with {solutions| designed with the goal of decreasing business costs of processing incoming payments.

 

 

Disadvantages of a Traditional Bank Lockbox



The lockbox is usually relatively costly . Banks normallyearn a monthly rate as well as a per line fee associated withhandling payment remittance detail .

Lockboxes can include security concerns . The traditional bank lockbox still takes a fair level of manual re-keying information . With the majority of manual data entry attendance get more info being entry level-administrative workers who are new to the financial institution or an outsourced service provider . The details from the lockbox provides all necessary elements to generate a fraudulent check .

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

Standard Bank Lockboxes Are Creating problems for your Customers' AP Department . Companies are modernizing their AP Department to eradicate manual process and deciding to pay their clients electronically via ACH , Credit Card or vCard . These popular methods of ePayment are generating an increase in email remittance . FinTech solution companies have bridged the gap to servethose companies in a cost efficient scalable option for automating Accounts Receivable .

 

 

Benefits of a FinTech Lockbox
Reduction Cost


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

Simple payment trail
It is simple to track incoming ePayments in one location. Instead of flipping through remittance emails or going to the vendor portal to download and read payment data . The AR Lockbox provides you with a single destination to house All of your incoming electronic payments produced for more rapid cash application .
Removes mail float
Mail float is a term for the time needed for a check to travel from the payer to the payee through the postal service . With the rise in B2B payments electronically , mail float is rapidly turning into a productof the past . The increasing amount of 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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