Best thing about Accounts Receivable Automation

accounts receivable automation

Are you aware of the advantages of accounts receivable automation? Traditionally, a bank lockbox has been used by company Accounts Receivable departments to increase efficiency.

Lockboxes have been around for decades and a lot of the conventional bank lockbox's lifespan has been utilized for processing payment information associated with payments made by check. Big offered this service to improve effectiveness and flow of company transactions simplifying the accounts receivables collection process.

Customers generally 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 assists 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 customers A/R workforce and increases their productivity. The price of the bank lockbox is usually a monthly cost 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 big change with Accounts Payable Departments paying electronically. This change to ePayments has revolutionized the FinTech trade with {solutions| designed with the goal of decreasing business costs of processing incoming payments.

 

 

Drawbacks of a Traditional Bank Lockbox



The lockbox could be somewhat costly . Banks commonlyearn a monthly fee in addition to a per line rate associated withprocessing payment remittance detail .

Lockboxes may contain security issues . The traditional bank lockbox still requires a fair amount of manual re-keying data . With the majority of manual data entry attendance being entry level-administrative workers who are a novice to the financial institution or an outsourced service provider . The details from the lockbox gives you all crucial components to create a fraudulent check .

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

Standard Bank Lockboxes Are Creating difficulty for your Customers' AP Department . Organizations are modernizing their AP Department to remove manual process and deciding to pay their customers electronically via ACH , Credit Card or vCard . These desired methods of ePayment are creating an increase in email remittance . FinTech solution companies have bridged the gap to supportthose businesses in a cost effective scalable alternative for automating Accounts Receivable .

 

 

Rewards of a FinTech Lockbox
Reduction Cost


The main objective of the FinTech Lockbox is usually to lowercost per transaction and supply an Accounts Receivable automation application to helpcompanies to rapidly clear cash and facilitate access to your working capital .

Simple payment trail
It is simple to track incoming ePayments from one location. Instead get more info of flipping through remittance emails or heading to the vendor portal to download and read payment data . The AR Lockbox provides you with a single location to house All of your incoming electronic payments created for quicker cash 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 way of the postal service . With the increase in B2B payments electronically , mail float is quickly becoming a thingof the past . The increase in electronic payments using FinTech Lockboxes with a significant focus on the cost reduction and speed at which you clear cash and apply it to your working capital .


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