Important things about AR Automation

accounts receivable automation

Are you aware of 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 a lot of the conventional bank lockbox's lifespan has been utilized for capturing payment data associated with payments made by check. Commercial banks offered this benefit to improve effectiveness and flow of company transactions streamlining the accounts receivables collection process.

Customers generally 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 business’ Days Sales Outstanding (DSO). Banks get the paper check, process it along with the remittance data and send the information back to their customer. 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 amount of checks over time can be pricey with a lockbox.

Today, we see a huge 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 usually rather high priced . Banks typicallyacquire a monthly rate as well as a per line fee related toprocessing payment remittance detail .

Lockboxes may include 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 personnel who are new to the bank or an outsourced service provider . The data from the lockbox gives you all essential components to create a fraudulent check .

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

Standard Bank Lockboxes Are Creating a predicament for your Customers' AP Department . Organizations are modernizing their AP Department to get rid of manual process and preferring to pay their customers electronically via ACH , Credit Card or vCard . These desired methods of ePayment are producing an increase in email remittance . FinTech solution companies have bridged the gap to assistthose businesses in an economical scalable alternative for automating Accounts Receivable .

Benefits of a FinTech Lockbox
Reduced Cost


The primary objective of the FinTech Lockbox is to decreasepricing per transaction and provide an Accounts Receivable automation program to permitorganizations to QUICKLY clear cash and facilitate use of your working capital .

Easy payment trail
It is easy to track incoming ePayments in click here one place. Instead of flipping through remittance emails or heading to the vendor portal to get payment information . The AR Lockbox provides you with one destination to hold All of your incoming electronic payments made for quicker cash application .
Removes mail float
Mail float is a term for the time needed for a check to go from the payer to the payee via the postal service . With the increase in B2B payments electronically , mail float is swiftly turning into a thingof the past . The rise in electronic payments using FinTech Lockboxes with a primary focus on the fee reduction and speed at which you clear cash and apply it to your working capital .


Leave a Reply

Your email address will not be published. Required fields are marked *