Reasons for AR 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 a while now and much of the conventional bank lockbox's life has been utilized for processing payment information associated with payments made by check. Mainstream provided this service to improve effectiveness and flow of business transactions simplifying the accounts receivables collection method.

Clients 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 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 cost along with a per line remittance data processing fee. To process a huge number of checks over time can be costly with a lockbox.

Today, we see a huge change 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.

 

 

Weaknesses of a Traditional Bank Lockbox



The lockbox often is fairly expensive . Banks typicallyearn a monthly rate in addition to a per line fee related toprocessing payment remittance detail .

Lockboxes can contain security concerns . The standard bank lockbox still takes a fair measure of manual re-keying data . With the majority of manual data entry attendance being entry level-administrative personnel who are new to the bank or an outsourced contractor . The information from the lockbox provides all necessary components to produce a fraudulent check .

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

Commercial Bank Lockboxes Are Creating a predicament for your Customers' AP Department . Organizations are modernizing their AP Department to get rid of manual process and preferring to pay their customers electronically via ACH , Credit Card or vCard . These preferred methods of ePayment are generating an increase in email remittance . FinTech solution businesses have bridged the gap to assistthose companies in a cost effective scalable alternative for automating Accounts Receivable .

 

 

Rewards of a FinTech Lockbox
Reduced Cost


The primary objective of the FinTech Lockbox is usually to reducecost per transaction and produce an Accounts Receivable automation tool to permitcompanies 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. Instead of flipping through remittance emails or heading to the vendor portal to download and read payment information . The AR Lockbox gives you one destination to hold All of your incoming electronic payments meant 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 via the postal service . With the increase in B2B payments electronically , mail float is swiftly turning into a thingof the past . The rise in electronic payments adopting FinTech Lockboxes with a primary focus on the price reduction and speed at which you clear cash and apply it to your working capital .


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