Reasons for Accounts Receivable Automation

accounts receivable automation

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

Lockboxes have been around for a while now and a lot of the conventional bank lockbox's life has been utilized for processing payment data associated with payments made by check. Commercial banks offered this benefit to improve effectiveness and flow of business transactions simplifying the accounts receivables collection method.

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

Bank lockboxes are strategically placed in a central location to reduce 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 productivity. The cost of the bank lockbox is typically a monthly cost along with a per line remittance data processing fee. To process a large amount of checks over time can be costly with a lockbox.

Today, we see a huge change 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.

 

 

Drawbacks of a Traditional Bank Lockbox



The lockbox is often relatively high priced . Banks commonlyacquire a monthly fee along with a per line fee connected withhandling payment remittance detail .

Lockboxes may include security issues . The traditional bank lockbox still takes a fair measure of manual re-keying data . With the majority of here manual data entry attendance being entry level-administrative personnel who are new to the financial institution or an outsourced contractor . The details from the lockbox gives you all necessary components to produce a fraudulent check .

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

Commercial Bank Lockboxes Are Creating problems for your Customers' AP Department . Organizations are modernizing their AP Department to eradicate manual process and preferring to pay their clients electronically via ACH , Credit Card or vCard . These preferred methods of ePayment are creating an increase in email remittance . FinTech solution businesses have bridged the gap to aidthose businesses in an economical scalable alternative for automating Accounts Receivable .

 

 

Rewards of a FinTech Lockbox
Reduction Cost


The major objective of the FinTech Lockbox is usually to reducecost per transaction and produce an Accounts Receivable automation application to permitcompanies to rapidly clear cash and improve use of your working capital .

Simple payment trail
It is simple to track incoming ePayments in one location. Rather than flipping through remittance emails or going to the vendor portal to download and read payment data . The AR Lockbox provides you with a single location to house All of your incoming electronic payments made for quicker cash application .
Removes mail float
Mail float is a term for the time needed for a check to travel from the payer to the payee read more via the postal service . With the rise in B2B payments electronically , mail float is quickly turning into a productof the past . The increasing amount of electronic payments embracing FinTech Lockboxes with a significant focus on the fee reduction and speed in which you clear cash and apply it to your here working capital .


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