Important things about AR Automation

accounts receivable automation

Are you familiar with the benefits of accounts receivable automation? Conventionally, a bank lockbox has been used by organization Accounts Receivable departments to increase efficiency.

Lockboxes have been around for a while now and a lot of the traditional bank lockbox's life has been utilized for capturing payment data associated with payments made by check. Mainstream provided this benefit to improve effectiveness and flow of company transactions streamlining the accounts receivables collection method.

Customers basically use 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 company’s 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 cost of the bank lockbox is typically a monthly cost along with a per line remittance data processing fee. To process a huge number of checks over time can be expensive with a lockbox.

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

Pitfalls of a Traditional Bank Lockbox



The lockbox often is rather expensive . Banks usuallyacquire a monthly rate as well as a per line fee connected withhandling payment remittance detail .

Lockboxes may include security issues . The standard bank lockbox still takes a decent measure of manual re-keying data . With the majority of manual data entry attendance being entry level-administrative employees who are new to the financial institution or an outsourced service provider . The data from the lockbox can provide all necessary components to create a fraudulent check .

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

Financial Institution Lockboxes Are Creating a predicament for your Customers' AP Department . Companies are modernizing their AP Department to eliminate manual task and opting to pay their customers electronically via ACH , Credit Card or vCard . These popular methods of ePayment are generating an increase in email remittance . FinTech solution companies have bridged the gap to helpthose firms in a cost efficient scalable alternative for automating Accounts Receivable .

Advantages of a FinTech Lockbox
Reduced Cost


The main objective of the FinTech Lockbox would be to lowerfees per transaction and provide click here an Accounts Receivable automation tool to permitcompanies to rapidly clear cash and facilitate use of your working capital .

Easy payment trail
It is simple to track incoming ePayments in one location. Instead of flipping through remittance emails or going to the vendor portal to download payment information . The AR Lockbox provides you with a single spot for a hold All of your incoming electronic payments produced for more rapid 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 by way of the postal service . With the rise in B2B payments electronically , mail float is rapidly turning into a productof the past . The increase in electronic payments using FinTech Lockboxes with a primary focus on the cost reduction and speed in which you clear cash and apply it to your working capital .


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