Best things about Accounts Receivable Automation

accounts receivable automation

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

Lockboxes have been around for many years and much of the conventional bank lockbox's life has been utilized for capturing payment information associated with payments made by check. Commercial banks offered this benefit to improve effectiveness and flow of business 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 efficiency. The price of the bank lockbox is usually a monthly fee along with a per line remittance data processing fee. To process a large amount of checks over time can be costly with a lockbox.

Today, we see a big change 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.

 

 

Disadvantages of a Traditional Bank Lockbox



The lockbox could be fairly costly . Banks generallyearn a monthly fee along with a per line fee related toprocessing payment remittance detail .

Lockboxes may contain security concerns . 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 ar lockbox workers who are a novice to the financial institution or an outsourced contractor . The data from the lockbox gives you all crucial components to make a fraudulent check .

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

Financial Institution Lockboxes Are Causing difficulty for your Customers' AP Department . Organizations are modernizing their AP Department to get rid of manual task and deciding to pay their customers electronically via ACH , Credit Card or vCard . These popular methods of ePayment are creating an increase in email remittance . FinTech solution businesses have bridged the gap to aidthose businesses in an economical scalable alternative for automating Accounts Receivable .

 

 

Pros of a FinTech Lockbox
Reduction Cost


The major goal of the FinTech Lockbox is usually to lowercost per transaction and supply an Accounts Receivable automation program to helpcompanies to QUICKLY clear cash and improve use of your working capital .

Simple payment trail
It is simple to track incoming ePayments in one place. Rather than flipping through remittance emails or heading to the vendor portal to download payment information . The AR Lockbox gives you a single destination to hold All of your incoming electronic payments meant for quicker cash application .
Removes mail float
Mail float is a term for the time required for a check to travel from the payer to the payee through 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 embracing FinTech Lockboxes with a major focus on the fee reduction and speed in which you clear cash and apply it to your working capital .


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