Benefits of Accounts Receivable Automation

accounts receivable automation

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

Lockboxes have been around for decades and a lot of the traditional bank lockbox's life has been used for processing payment data associated with payments made by check. Big offered this amenity to improve effectiveness and flow of business transactions simplifying the accounts receivables collection process.

Clients basically 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 business’ Days Sales Outstanding (DSO). Banks receive 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 efficiency. The cost 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 pricey with a lockbox.

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

 

 

Drawbacks of a Traditional Bank Lockbox



The lockbox could be fairly costly . Banks generallyearn a monthly fee as well as a per line rate related toprocessing payment remittance detail .

Lockboxes may include security concerns . The traditional bank lockbox still requires a decent level of manual re-keying data . With the majority of manual data entry attendance being entry level-administrative workers who are a novice to the financial institution or an outsourced service provider . The information from the lockbox provides all needed elements to generate a fraudulent check .

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

Commercial Bank Lockboxes Are Causing a Problem for your Customers' AP Department . Companies are modernizing their AP Department to get rid of manual task and opting to pay their customers electronically via ACH , Credit Card or vCard . These popular methods of ePayment are producing an increase in email remittance . FinTech solution businesses have bridged the gap to servethose organizations in a cost effective scalable option for automating Accounts Receivable .

 

 

Features of a FinTech Lockbox
Reduced Cost


The main goal of the FinTech Lockbox will be to decreasecost per transaction and supply an Accounts Receivable automation tool to allowcompanies to rapidly clear cash and facilitate use more info of your working capital .

Trouble-free payment trail
You can easily track incoming ePayments in one place. Rather than flipping through remittance emails or going to the vendor portal to download payment data . The AR Lockbox gives you one location to house ALL your incoming electronic payments created for more rapid cash application .
Removes mail float
Mail float is a term for the time needed for a check to go from the payer to the payee through the postal service . With the rise in B2B payments electronically , mail float is rapidly becoming a productof the past . The improvement in electronic payments adopting FinTech Lockboxes with a significant focus on the cost reduction and speed at which you clear cash and apply it to your working capital .


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