Benefits of using AR Automation

accounts receivable automation

Are you familiar with 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 a while now and a lot of the conventional bank lockbox's life has been used for capturing payment information associated with payments made by check. Commercial banks 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 reduce mail delivery time, which also helps with lowering the business’ 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 huge number of checks over time can be costly with a lockbox.

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

 

 

Pitfalls of a Traditional Bank Lockbox



The lockbox often is fairly expensive . Banks normallyearn a monthly fee as well as a per line rate linked toprocessing payment remittance detail .

Lockboxes can contain security concerns . The traditional bank lockbox still requires a fair level of manual re-keying information . With the majority of manual data entry attendance being entry level-administrative staff who are a novice to the financial institution or an outsourced service provider . The information from the lockbox provides all crucial elements to generate a fraudulent check .

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

Traditional Bank Lockboxes Are Creating a predicament for your Customers' AP Department . Corporations are modernizing ar lockbox their AP Department to eliminate manual process and preferring to pay their clients 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 servethose corporations in an economical scalable option for automating Accounts Receivable .

 

 

Pros of a FinTech Lockbox
Reduced Cost


The main goal of the FinTech Lockbox is to lowerfees per transaction and supply an Accounts Receivable automation tool to helporganizations to QUICKLY clear cash and improve use of your working capital .

Simple payment trail
You can easily track incoming ePayments from one place. Instead of flipping through remittance emails or heading to the vendor portal to download payment information . The AR Lockbox gives you one spot for a house All of your incoming electronic payments produced for more rapid cash application .
Eliminates mail float
Mail float is a term for the time needed for a check to travel from the payer to the payee from the postal service . With the increase in B2B payments more info electronically , mail float is swiftly turning into a thingof the past . The improvement in electronic payments more info using 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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