Important things about Accounts Receivable Automation

accounts receivable automation

Are you familiar with 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 a while now and a lot of the conventional bank lockbox's life has been used for capturing payment data associated with payments made by check. Commercial banks offered this service to improve effectiveness and flow of business transactions streamlining the accounts receivables collection method.

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

Bank lockboxes are strategically placed in a central location to decrease mail delivery time, which also helps with lowering the business’ 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 price of the bank lockbox is typically a monthly fee along with a per line remittance data processing cost. To process a large number of checks over time can be expensive with a lockbox.

Today, we see a big change 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.

Shortcomings of a Traditional Bank Lockbox



The lockbox could be somewhat high priced . Banks usuallyearn a monthly rate along with 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 information . With the majority of manual data entry attendance being entry level-administrative staff who are a novice to the click here bank or an outsourced service provider . The data from the lockbox gives you all required elements to produce a fraudulent check .

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

Financial Institution Lockboxes Are Causing issues for your Customers' AP Department . Companies are modernizing their AP Department to remove manual process and opting 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 supportthose firms in a cost efficient scalable alternative for automating Accounts Receivable .

Rewards of a FinTech Lockbox
Reduced Cost


The primary goal of the FinTech Lockbox is usually to lowercost per transaction and provide an Accounts Receivable automation application to permitorganizations to rapidly clear cash and facilitate use of your working capital .

Trouble-free payment trail
You can easily track incoming ePayments in one location. Instead of flipping through remittance emails or heading to the vendor portal to download and read payment information . The AR Lockbox provides you with one destination to house ALL your incoming electronic payments made for more rapid cash application .
Removes 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 rise in B2B payments electronically , mail float is rapidly becoming 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 check here working capital .


Leave a Reply

Your email address will not be published. Required fields are marked *