Benefits of 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 expediency.

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

Clients basically leverage the bank lockbox to receive check payments in one consistent location.

Bank lockboxes are strategically placed in a central location to decrease mail delivery time, which also assists 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 client. 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 typically a monthly cost along with a per line remittance data processing cost. To process a large 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.

 

 

Weaknesses of a Traditional Bank Lockbox



The lockbox could be rather costly . Banks generallyacquire a monthly rate as well as a per line rate connected withhandling payment remittance detail .

Lockboxes may include 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 personnel who are new to the financial institution or an outsourced service provider . The data from the lockbox provides all crucial components to produce a fraudulent check .

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

Standard Bank Lockboxes Are Creating difficulty for your Customers' AP Department . Businesses are modernizing their AP Department to remove manual task and deciding to pay their clients electronically via ACH , Credit Card or vCard . These preferred methods of ePayment are creating an increase in email remittance . FinTech solution businesses have bridged the gap to servethose corporations in an economical scalable option for automating Accounts Receivable .

 

 

Rewards of a FinTech Lockbox
Reduced Cost


The primary objective of the FinTech Lockbox is usually to reducepricing per transaction and supply an Accounts Receivable automation tool to helpbusinesses to QUICKLY clear cash and facilitate use of your working capital .

Trouble-free payment trail
You can easily track incoming ePayments from one location. Rather than flipping through remittance emails or heading to the vendor portal to get payment information . The AR Lockbox gives you a single destination to hold ALL more info your incoming electronic payments meant for speedier cash application .
Eliminates mail float
Mail float is a term for the time needed for a check to go from the payer to the payee from the postal service . With the rise in B2B payments electronically , mail float is rapidly becoming a thingof the past . The increasing amount of electronic payments embracing FinTech Lockboxes with a primary focus on the fee reduction and speed in which you clear cash and apply it to your working capital .


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