Best things about Accounts Receivable Automation

accounts receivable automation

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

Lockboxes have been around for many years and a lot of the conventional bank lockbox's life has been utilized for capturing payment data associated with payments made by check. Commercial banks offered 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 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 amount of checks over time can be costly with a lockbox.

Today, we see a big 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.

Shortcomings of a Traditional Bank Lockbox



The lockbox often is relatively high priced . Banks typicallyacquire a monthly rate as well as a per line rate linked tohandling payment remittance detail .

Lockboxes may include security issues . The standard bank lockbox still requires a decent level of manual re-keying data . With the majority of manual data entry attendance being entry level-administrative staff who are new to the financial institution or an outsourced contractor . The information from the lockbox provides all required elements to generate a fraudulent check .

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

Financial Institution Lockboxes Are Causing problems for your Customers' AP Department . Corporations are modernizing their AP Department to get rid of website manual task and opting to pay their clients electronically via ACH , Credit Card or vCard . These preferred methods of ePayment are producing an increase in email remittance . FinTech solution businesses have bridged the gap to aidthose firms in an economical scalable option for automating Accounts Receivable .

Advantages of a FinTech Lockbox
Reduced Cost


The major objective of the FinTech Lockbox is usually to reducecost per transaction and produce an Accounts Receivable automation program to helpbusinesses to QUICKLY clear cash and facilitate use of your working capital .

Easy payment trail
You can easily track incoming ePayments from one place. Instead of 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 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 from the postal service . With the increase in B2B payments electronically , mail float is rapidly turning into a productof the past . The increase in electronic payments using FinTech Lockboxes with a significant focus on the price reduction and speed in which you clear cash and apply it to your working capital .


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