Reasons for AR Automation

accounts receivable automation

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

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

Clients basically leverage 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 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 clients A/R workforce and increases their efficiency. The cost of the bank lockbox is usually 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 trade with {solutions| designed with the goal of decreasing business costs of processing incoming payments.

 

 

Disadvantages of a Traditional Bank Lockbox



The lockbox can be relatively costly . Banks usuallyacquire a monthly fee as well as a per line rate connected toprocessing payment remittance detail .

Lockboxes may include security issues . The standard 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 gives you all crucial elements to produce a fraudulent check .

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

Financial Institution Lockboxes Are Creating issues for your Customers' AP Department . Companies are modernizing their AP Department to remove manual process and deciding to pay their clients electronically via ACH , Credit Card or vCard . These preferred methods of ePayment are generating an increase in email remittance . FinTech solution companies have bridged the gap to supportthose firms in a cost efficient scalable solution for automating Accounts Receivable .

 

 

Advantages of a FinTech Lockbox
Reduction Cost


The main goal of the FinTech Lockbox is usually to reducefees per transaction and produce an Accounts Receivable automation tool to permitorganizations to QUICKLY clear cash and facilitate access to your working capital .

Simple payment trail
It is easy to track incoming ePayments in one place. Instead of flipping through remittance emails or going to the vendor portal to get payment information . The AR Lockbox gives you one spot for a house ALL your incoming electronic payments produced for faster 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 via the postal service . With the rise in B2B payments electronically , mail float is swiftly turning into a productof the past . The improvement in electronic payments choosing FinTech Lockboxes with a primary focus on the price here reduction and speed in which you clear cash and apply it to your working capital .


1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

Comments on “Reasons for AR Automation”

Leave a Reply

Gravatar