Advantages of Accounts Receivable Automation

accounts receivable automation

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

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

Clients generally leverage 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 price of the bank lockbox is typically a monthly cost along with a per line remittance data processing cost. To process a large number of checks over time can be pricey with a lockbox.

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

 

 

Weaknesses of a Traditional Bank Lockbox



The lockbox is often somewhat costly . Banks usuallyacquire a monthly rate along with a per line rate associated withhandling payment remittance detail .

Lockboxes can include security issues . The traditional bank lockbox still requires a fair level of manual re-keying data . With the majority of manual data entry attendance being entry level-administrative staff who are new to the bank or an outsourced contractor . The data from the lockbox provides all necessary components to create a fraudulent check .

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

Standard Bank Lockboxes read more Are Creating a Problem for your Customers' AP Department . Organizations are modernizing their AP Department to eliminate manual process and deciding to pay their customers electronically via ACH , Credit Card or vCard . These preferred methods of ePayment are generating an increase in email remittance . FinTech solution businesses have bridged the gap to servethose corporations in an economical scalable solution for automating Accounts Receivable .

 

 

Rewards of a FinTech Lockbox
Reduced Cost


The primary objective of the FinTech Lockbox would be to lowerfees per transaction and produce an Accounts Receivable automation application to helpbusinesses to rapidly clear cash and facilitate access to your working capital .

Easy payment trail
You can easily track incoming ePayments in one place. Instead of flipping through remittance emails or heading to the vendor portal to download payment data . The AR Lockbox gives you a single place to house ALL your incoming electronic payments produced for check here quicker cash application .
Removes mail float
Mail float is a term for the time needed for a check to go from check here the payer to the payee from the postal service . With the rise in B2B payments electronically , mail float is quickly turning into a thingof the past . The increase in electronic payments using FinTech Lockboxes with a major focus on the fee reduction and speed at which you clear cash and apply it to your working capital .


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