Aspects of AR Automation

accounts receivable automation

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

Lockboxes have been around for decades and much of the conventional bank lockbox's life has been used for capturing payment information associated with payments made by check. Mainstream offered this amenity to improve effectiveness and flow of company transactions simplifying the accounts receivables collection method.

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

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

 

 

Disadvantages of a Traditional Bank Lockbox



The lockbox often is somewhat costly . Banks typicallyacquire a monthly fee in addition to a per line rate associated withprocessing payment remittance detail .

Lockboxes may include security issues . The standard bank lockbox still requires a fair amount of manual re-keying data . With the majority of manual data entry attendance being entry level-administrative personnel who are a novice to the financial institution or an outsourced service provider . The data from the lockbox can provide all necessary components to produce a fraudulent check .

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

Financial Institution Lockboxes Are Creating issues 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 preferred methods of ePayment are producing an increase in email remittance . FinTech solution businesses have bridged the gap to assistthose organizations in a cost efficient scalable option for automating Accounts Receivable .

 

 

Advantages of a FinTech Lockbox
Reduced Cost


The major goal of the FinTech Lockbox is usually to lowerpricing per transaction and produce an Accounts Receivable automation tool to letbusinesses to QUICKLY clear cash and improve use of your working capital .

Easy payment trail
It is simple to track incoming ePayments from 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 a single spot for a house All of your incoming electronic payments meant for more rapid cash application .
Gets rid of mail float
Mail float is a term for the time required for a check to go from the payer to the payee through the postal service . With the increase in B2B payments electronically , mail float is rapidly turning into a productof the past . The increase in electronic payments embracing FinTech Lockboxes with a primary focus on the rate reduction and speed in which you clear cash and apply it to your working capital .


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