Benefits of AR Automation

accounts receivable automation

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

Lockboxes have been around for decades and a lot of the conventional bank lockbox's life has been utilized for processing payment data associated with payments made by check. Commercial banks provided this amenity to improve effectiveness and flow of company transactions streamlining the accounts receivables collection process.

Customers generally use the bank lockbox to receive check payments in one consistent location.

Bank lockboxes are purposefully 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 customers A/R workforce and increases their efficiency. The cost of the bank lockbox is typically a monthly fee 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 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.

 

 

Drawbacks of a Traditional Bank Lockbox



The lockbox is often somewhat expensive . Banks commonlyearn a monthly rate as well as a per line rate connected toprocessing payment remittance detail .

Lockboxes may include click here security concerns . The traditional bank lockbox still takes a fair measure of manual re-keying data . With the majority of manual data entry attendance being entry level-administrative employees who are a novice to the financial institution or an outsourced service provider . The data from the lockbox can provide all required elements to create a fraudulent check .

Lockboxes don’t connect into your accounting program . Bank lockboxes process the payments and remittance information thenforward you the information . Your personnel still must enter that data into your ERP to clear the cash .

Traditional Bank Lockboxes Are Causing issues for your Customers' AP Department . Businesses are modernizing their AP Department to get rid of manual process and preferring 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 businesses have bridged the gap to servethose firms in an economical scalable alternative for automating Accounts Receivable .

 

 

Features of a FinTech Lockbox
Reduction Cost


The primary objective of the FinTech Lockbox is usually to decreasecost per transaction and produce an Accounts Receivable automation program to permitcompanies to rapidly clear cash and facilitate access to your working capital .

Trouble-free payment trail
It is simple to track incoming ePayments in one location. Rather than flipping through remittance emails or going to the vendor portal to download and read payment data . The AR Lockbox provides you with a single click here place to hold ALL your incoming electronic payments made for swifter cash application .
Removes mail float
Mail float is a term for the time required for a check to go from the payer to the payee via 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 embracing FinTech Lockboxes with a primary focus on the rate click here reduction and speed at which you clear cash and apply it to your working capital .


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