Reasons for AR Automation

accounts receivable automation

Are you aware of the benefits of accounts receivable automation? Conventionally, a bank lockbox has been used by company Accounts Receivable departments to increase expediency.

Lockboxes have been around for a while now and a lot of the traditional bank lockbox's lifespan has been used for capturing payment data associated with payments made by check. Big provided this amenity to improve effectiveness and flow of business transactions streamlining the accounts receivables collection process.

Customers basically leverage the bank lockbox to receive check payments in one consistent location.

Bank lockboxes are strategically 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 data back to their client. 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 typically a monthly fee along with a per line remittance data processing fee. To process a large number of checks over time can be expensive with a lockbox.

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

Pitfalls of a Traditional Bank Lockbox



The lockbox often is somewhat high priced . Banks usuallyearn a monthly fee along with a per line rate connected toprocessing payment remittance detail .

Lockboxes may contain security concerns . The standard bank lockbox still requires a decent measure of manual re-keying data . With the majority of manual data entry attendance being entry level-administrative staff who are new to the financial institution or an outsourced contractor . The data from the lockbox can provide all vital elements to make a fraudulent check .

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

Traditional Bank Lockboxes Are Creating a Problem for your Customers' AP Department . Organizations are modernizing their AP Department to remove manual task and preferring to pay their customers electronically via ACH , Credit Card or vCard . check here These preferred methods of ePayment are producing an increase in email remittance . FinTech solution companies have bridged the gap to supportthose companies in a cost efficient scalable alternative for automating Accounts Receivable .

Rewards of a FinTech Lockbox
Reduction Cost


The primary goal of the FinTech Lockbox is usually to lowerpricing per transaction and produce an Accounts Receivable automation tool to allowcompanies to rapidly clear cash and facilitate access to your working capital .

Simple payment trail
It is simple to track incoming ePayments in one place. Rather than flipping through remittance emails or heading to the vendor portal to download and read payment information . The AR Lockbox provides more info you with one location to house All of your incoming electronic payments meant for faster cash application .
Gets rid of mail float
Mail float is a term for the time needed for a check to travel from the payer to the payee via the postal service . With the rise in B2B payments electronically , mail float is rapidly becoming a thingof the past . The increasing amount of electronic payments using FinTech Lockboxes with a major focus on the rate reduction and speed at which you clear cash and apply it to your click here working capital .


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