Advantages of Accounts Receivable Automation

accounts receivable automation

Are you familiar with the advantages 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 method.

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 company’s 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 efficiency. The price of the bank lockbox is usually a monthly fee along with a per line remittance data processing cost. To process a large amount of checks over time can be costly with a lockbox.

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

Weaknesses of a Traditional Bank Lockbox



The lockbox is often somewhat expensive . Banks commonlyearn a monthly fee along with a per line rate connected tohandling 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 employees who are a novice to the bank or an outsourced contractor . The data from the lockbox gives you all crucial components to make a fraudulent check .

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

Standard Bank Lockboxes Are Creating issues for your Customers' AP Department . Businesses are modernizing their AP Department to eliminate manual task and preferring to pay their clients electronically via ACH , Credit Card or vCard . These popular methods of ePayment are producing an increase in email remittance . FinTech solution companies have bridged the gap to helpthose companies in a cost effective scalable solution for automating Accounts Receivable .

Pros of a FinTech Lockbox
Reduced Cost


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

Trouble-free payment trail
You can easily track incoming ePayments from one place. Instead of flipping through remittance emails or going to the vendor portal to download and read payment data . The AR Lockbox provides you with one destination to house All of your incoming electronic payments created for swifter 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 via the postal service . With the rise in B2B payments electronically , mail float is quickly becoming a thingof the past . The rise in electronic payments adopting FinTech Lockboxes with a major focus on the cost reduction and speed at which you clear cash and apply it to your working capital .


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