Benefits of using Accounts Receivable Automation

accounts receivable automation

Are you aware of 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 traditional bank lockbox's life has been utilized 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 process.

Customers generally 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 costly with a lockbox.

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

Pitfalls of a Traditional Bank Lockbox



The lockbox could be relatively expensive . Banks normallyacquire a monthly rate as well as a per line rate connected withprocessing payment remittance detail .

Lockboxes can include security issues . The traditional bank lockbox still requires a decent measure of manual re-keying data . With the majority of manual data entry attendance being entry level-administrative employees who are a novice to the financial institution or an outsourced contractor . The information from the lockbox can provide all required elements to create a fraudulent check .

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

Financial Institution Lockboxes Are Causing a Problem for your Customers' AP Department . Corporations are modernizing their AP Department to get rid of manual task and deciding to pay their customers electronically via ACH , Credit Card or vCard . These preferred methods of ePayment are producing an increase in email remittance . FinTech solution businesses have bridged the gap to assistthose firms in a more info cost effective scalable solution for automating Accounts Receivable .

Advantages of a FinTech Lockbox
Reduced Cost


The major objective of the FinTech Lockbox will be to lowerfees per transaction and supply an Accounts Receivable automation program to alloworganizations to QUICKLY clear cash and improve access to your working capital .

Trouble-free payment trail
It is easy to track incoming ePayments from one place. Instead of flipping through remittance emails or heading to the vendor portal to get payment data . The AR Lockbox provides you with a single destination to house All of your incoming electronic payments produced for speedier 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 via the postal service . With the rise in B2B payments electronically , mail float is rapidly turning into a thingof the past . The increasing amount of electronic payments choosing FinTech Lockboxes with a major focus on the price reduction and speed in which you clear cash and apply it to your working capital .


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