Benefits of AR Automation

accounts receivable automation

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

Lockboxes have been around for decades and much of the conventional bank lockbox's life has been used for capturing payment data associated with payments made by check. Commercial banks offered this amenity to improve effectiveness and flow of company transactions simplifying 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 reduce mail delivery time, which also helps with lowering the business’ Days Sales Outstanding (DSO). Banks receive the paper check, process it along with the remittance data and send the information back to their client. Because banks are processing checks and remittance this decreases the customers A/R workforce and increases their efficiency. The cost of the bank lockbox is usually a monthly fee along with a per line remittance data processing fee. To process a huge amount of checks over time can be expensive with a lockbox.

Today, we see a big shift with Accounts Payable Departments paying electronically. This shift to ePayments has revolutionized 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 is usually fairly costly . Banks typicallyearn a monthly rate along with a per line rate associated withhandling payment remittance detail .

Lockboxes can include security issues . The traditional bank lockbox still takes a decent level of manual re-keying data . With the majority of manual data entry attendance being entry level-administrative employees who are a novice to the financial institution or an outsourced contractor . The details from the lockbox can provide all essential elements to produce a fraudulent check .

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

Financial Institution Lockboxes Are Causing issues for your Customers' AP Department . Corporations are modernizing their AP Department to eliminate manual task and opting to pay their clients electronically via ACH , Credit Card or vCard . These desired methods of ePayment are producing an increase in email remittance . FinTech solution companies have bridged the gap to aidthose businesses in a cost effective scalable solution for automating Accounts Receivable .

 

 

Advantages of a FinTech Lockbox
Reduced Cost


The primary goal of the FinTech Lockbox is to click here lowerfees per transaction and produce an Accounts Receivable automation program to letorganizations to rapidly clear cash and improve use of your working capital .

Trouble-free payment trail
You can easily track incoming ePayments from one place. Instead of flipping through remittance emails or going to the vendor portal to download payment information . The AR Lockbox gives you 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 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 quickly becoming a thingof the past . The rise in electronic payments adopting 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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