Important things about Accounts Receivable Automation

accounts receivable automation

Are you aware of the advantages of accounts receivable automation? Conventionally, a bank lockbox has been used by business 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. Commercial banks offered this benefit to improve effectiveness and flow of company transactions simplifying the accounts receivables collection process.

Customers generally 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 assists with lowering the business’ Days Sales Outstanding (DSO). Banks get 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 usually a monthly cost along with a per line remittance data processing fee. To process a large number of checks over time can be costly with a lockbox.

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

Downsides of a Traditional Bank Lockbox



The lockbox can be relatively costly . Banks typicallyacquire a monthly rate as well as a per line fee related toprocessing payment remittance detail .

Lockboxes may include security concerns . The traditional bank lockbox still takes a decent level 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 data from the lockbox can provide all essential components to create a fraudulent check .

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

Standard Bank Lockboxes Are Creating a predicament for your Customers' AP Department . Businesses are modernizing their AP Department to eradicate manual process and deciding to pay their clients electronically via ACH , Credit Card or vCard . These desired methods of ePayment are generating an increase in email remittance . FinTech solution companies have bridged the gap to assistthose companies in an economical scalable option for automating Accounts Receivable .

Advantages of a FinTech Lockbox
Reduction Cost


The primary objective of the FinTech Lockbox is usually to reducefees per transaction and produce an Accounts Receivable automation application to alloworganizations to QUICKLY clear cash and facilitate use of your working capital .

Easy payment trail
It is simple to track incoming ePayments in one location. Instead of flipping through remittance emails or going to the vendor ar automation solutions portal to download payment information . The AR Lockbox gives you a single destination to house ALL your incoming electronic payments meant for swifter cash application .
Eliminates mail float
Mail float is a term for the time required for a check to travel from the payer to the payee by means of the postal service . With the increase in B2B payments electronically , mail float is quickly becoming a thingof the past . The rise in electronic payments embracing 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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