Great things about AR Automation

accounts receivable automation

Are you aware of the benefits 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 much of the conventional bank lockbox's lifespan has been utilized for capturing payment data associated with payments made by check. Big provided this service to improve effectiveness and flow of business transactions simplifying 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 reduce mail delivery time, which also helps with lowering the business’ Days Sales Outstanding (DSO). Banks get 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 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 number of checks over time can be pricey with a lockbox.

Today, we see a big 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.

 

 

Shortcomings of a Traditional Bank Lockbox



The lockbox is usually fairly costly . Banks usuallyacquire a monthly fee in addition to a per line rate linked toprocessing payment remittance detail .

Lockboxes may include security concerns . The traditional bank lockbox still takes a fair level of manual re-keying information . With the majority of manual data entry attendance being entry level-administrative personnel who are a novice to the bank or an outsourced contractor . The data from the lockbox provides all essential elements to create a fraudulent check .

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

Traditional Bank Lockboxes Are Creating difficulty for your Customers' AP Department . Companies are modernizing their AP Department to get more info get rid of manual process and opting to pay their clients electronically via ACH , Credit Card or vCard . These desired methods of ePayment are generating an increase in email remittance . FinTech solution businesses have bridged the gap to assistthose companies in a cost efficient scalable alternative for automating Accounts Receivable .

 

 

Pros of a FinTech Lockbox
Reduced Cost


The major objective of the FinTech Lockbox is usually to decreasefees per transaction and provide an Accounts Receivable automation tool to helporganizations to QUICKLY clear cash and improve use of your working capital .

Trouble-free payment trail
It is simple to track incoming ePayments in one location. Rather than flipping through remittance emails or going to the vendor portal to download and read payment data . The AR Lockbox gives you a single destination to house All of your incoming electronic payments created for quicker 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 rise in B2B payments electronically , mail float is quickly turning into a thingof the past . The increase in electronic payments adopting FinTech Lockboxes with an essential focus on the rate reduction and speed at which you clear cash and apply it to your working capital .


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