Best things about Accounts Receivable Automation

accounts receivable automation

Do you know the benefits of accounts receivable automation? Traditionally, a bank lockbox has been used by company Accounts Receivable departments to increase expediency.

Lockboxes have been around for a while now and a lot of the conventional bank lockbox's lifespan has been used for capturing payment data associated with payments made by check. Big offered this benefit to improve effectiveness and flow of company 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 decrease 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 customers 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 huge number of checks over time can be pricey with a lockbox.

Today, we see a drastic shift with Accounts Payable Departments paying electronically. This change to ePayments has revolutionized 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 can be relatively high priced . Banks typicallyearn a monthly rate as well as a per line rate related toprocessing payment remittance detail .

Lockboxes may include security concerns . The standard bank lockbox still takes a decent level of manual re-keying data . With the majority of manual data entry attendance being entry level-administrative staff who are a novice to the bank or an outsourced contractor . The data from the lockbox gives you all crucial elements to generate a fraudulent check .

Lockboxes don’t tie into your accounting program . 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 issues for your Customers' AP Department . Companies are modernizing their AP Department to remove manual process and deciding to pay their clients electronically via ACH , Credit Card or vCard . These preferred methods of ePayment are generating an increase in email remittance . FinTech solution companies have bridged the gap to supportthose firms in a cost effective scalable alternative for automating Accounts Receivable .

 

 

Features of a FinTech Lockbox
Reduced Cost


The main objective of the FinTech Lockbox would be to lowercost per transaction and produce an Accounts Receivable automation tool to letcompanies to rapidly clear cash and facilitate access to your working capital .

Simple payment trail
You can easily track incoming ePayments in one location. Instead of flipping through remittance emails or more info going to the vendor portal to get payment information . The AR Lockbox gives you one spot for a house ALL your incoming electronic payments produced for quicker cash application .
Removes mail float
Mail float is a term for the time needed for a check to go from the payer to the payee by way of the postal service . With the rise in B2B payments electronically , mail float is swiftly becoming a productof the past . The improvement in electronic payments choosing 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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