Great things about Accounts Receivable Automation

accounts receivable automation

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

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

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 assists with lowering the company’s Days Sales Outstanding (DSO). Banks get the paper check, process it along with the remittance data and send the information back to their client. Because banks are processing checks and remittance this decreases the customers A/R workforce and increases their productivity. The cost of the bank lockbox is typically a monthly cost along with a per line remittance data processing fee. To process a large amount of checks over time can be pricey with a lockbox.

Today, we see a big shift with Accounts Payable Departments paying electronically. This shift 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 is often relatively expensive . Banks normallyearn a monthly fee in addition to a per line rate linked toprocessing payment remittance detail .

Lockboxes can contain security issues . The standard bank lockbox still requires a fair measure of manual re-keying information . With the majority of manual data entry attendance being entry level-administrative employees who are new to the bank or an outsourced contractor . The details from the lockbox gives you all required elements to create a fraudulent check .

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

Financial Institution Lockboxes Are Creating difficulty for your Customers' AP Department . Businesses are modernizing their AP Department to remove manual process and preferring to pay their customers 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 aidthose companies in an check here economical scalable alternative for automating Accounts Receivable .

 

 

Pros of a FinTech Lockbox
Reduced Cost


The primary goal of the FinTech Lockbox is usually to reducepricing per transaction and provide an Accounts Receivable automation get more info application to allowbusinesses to rapidly clear cash and improve use of your working capital .

Easy payment trail
You can easily track incoming ePayments from one location. Instead of flipping through remittance emails or heading to the vendor portal to download and read payment data . The AR Lockbox gives you one destination to house All of your incoming electronic payments made for quicker cash read more application .
Gets rid of mail float
Mail float is a term for the time needed for a check to go from the payer to the payee by means of the postal service . With the increase in B2B payments electronically , mail float is quickly turning into a thingof the past . The rise in electronic payments adopting FinTech Lockboxes with a major focus on the cost reduction and speed in which you clear cash and apply it to your working capital .


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