Important things about 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 expediency.

Lockboxes have been around for many years and a lot of the traditional bank lockbox's life has been used for processing payment information associated with payments made by check. Commercial banks offered this amenity to improve effectiveness and flow of business transactions simplifying the accounts receivables collection process.

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 cost of the bank lockbox is typically a monthly fee along with a per line remittance data processing cost. To process a large number of checks over time can be expensive with a lockbox.

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

 

 

Pitfalls of a Traditional Bank Lockbox



The lockbox is usually rather high priced . Banks normallyacquire a monthly rate in addition to a per line fee associated withprocessing payment remittance detail .

Lockboxes may include security concerns . The traditional bank lockbox still requires a decent level of manual re-keying data . With the majority of manual data entry attendance being entry level-administrative personnel who are a novice to the bank or an outsourced contractor . The information from the lockbox can provide all necessary elements to generate a fraudulent check .

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

Commercial Bank Lockboxes Are Creating a Problem for your Customers' AP Department . Corporations are modernizing their AP Department to eradicate manual process and opting to pay their clients electronically via ACH , Credit Card or vCard . These desired methods of ePayment are creating an increase in email remittance . FinTech solution businesses have bridged the gap to supportthose organizations in a cost effective scalable option for automating Accounts Receivable .

 

 

Features of a FinTech Lockbox
Reduction Cost


The primary goal of the FinTech Lockbox is to lowercost per transaction and produce an Accounts Receivable automation application to helpcompanies to QUICKLY clear cash and facilitate use of your working capital .

Easy payment trail
It is easy to track incoming ePayments in one place. Instead of flipping accounts receivable automation through remittance emails or heading to the vendor portal to download and read payment data . The AR Lockbox provides you with one spot for a house ALL your incoming electronic payments meant for more rapid cash application .
Gets rid of mail float
Mail float is a term for the time required for a check to go from the payer to the payee by means of the postal service . With the rise in B2B payments electronically , mail float is quickly becoming a productof the past . The improvement in electronic payments adopting FinTech Lockboxes with a major focus on the rate reduction and speed in which you clear cash and apply it to your working capital .


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