Aspects of AR Automation

accounts receivable automation

Are you aware of the advantages 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 traditional bank lockbox's lifespan has been used for capturing payment information associated with payments made by check. Mainstream offered this service to improve effectiveness and flow of business transactions streamlining the accounts receivables collection process.

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

Bank lockboxes are strategically 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 customer. 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 fee along with a per line remittance data processing cost. To process a large amount of checks over time can be expensive 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.

Weaknesses of a Traditional Bank Lockbox



The lockbox could be fairly high priced . Banks usuallyacquire a monthly fee along with a per line fee linked tohandling payment remittance detail .

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

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

Financial Institution Lockboxes Are Causing issues for your get more info Customers' AP Department . Businesses 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 creating an increase in email remittance . FinTech solution businesses have bridged the gap click here to servethose corporations in an economical scalable option for automating Accounts Receivable .

Pros of a FinTech Lockbox
Reduced Cost


The major goal of the FinTech Lockbox is usually to lowerpricing per transaction and produce an Accounts Receivable automation tool to permitcompanies to QUICKLY clear cash and facilitate access read more to your working capital .

Easy payment trail
It is easy to track incoming ePayments from 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 one place to house All of your incoming electronic payments produced for speedier cash application .
Removes mail float
Mail float is a term for the time required for a check to travel from the payer to the payee via the postal service . With the increase in B2B payments electronically , mail float is quickly turning into a thingof the past . The increasing amount of electronic payments choosing 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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