Attributes of Accounts Receivable Automation

accounts receivable automation

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

Lockboxes have been around for decades and a lot of the conventional bank lockbox's life has been utilized for capturing payment data associated with payments made by check. Big provided 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 decrease mail delivery time, which also assists 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 client. Because banks are processing checks and remittance this decreases the clients A/R workforce and increases their productivity. The price of the bank lockbox is typically a monthly fee along with a per line remittance data processing cost. To process a large number of checks over time can be expensive with a lockbox.

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

 

 

Weaknesses of a Traditional Bank Lockbox



The lockbox could be somewhat expensive . Banks usuallyacquire a monthly rate as well as a per line fee connected toprocessing payment remittance detail .

Lockboxes can contain security issues . The traditional bank lockbox still requires a decent amount of manual re-keying data . With the majority of manual data entry attendance being entry level-administrative personnel who are a novice to the financial institution or an outsourced contractor . The details from the lockbox provides all crucial elements to generate a fraudulent check .

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

Financial Institution Lockboxes Are Creating difficulty for your Customers' AP Department . Organizations are modernizing their AP Department to remove manual task and opting to pay their customers electronically via ACH , Credit Card or vCard . These preferred methods of ePayment are creating an increase in email remittance . FinTech solution companies have bridged the gap to helpthose firms in an economical scalable solution for automating Accounts Receivable .

 

 

Benefits of a FinTech Lockbox
Reduced Cost


The primary objective of the FinTech Lockbox is usually to decreasepricing per transaction and produce an Accounts Receivable automation application to helpbusinesses to rapidly clear cash and facilitate access to your working capital .

Easy 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 and read payment data . The AR Lockbox gives you a single location to 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 go from the payer to the payee by way of the postal service . With the increase in B2B payments electronically , mail float is quickly becoming a productof the past . The increase in electronic payments choosing FinTech Lockboxes with a primary focus on the cost reduction and speed at which you clear cash and apply it to your working capital .


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