Important things about AR Automation

accounts receivable automation

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

Lockboxes have been around for many years and a lot of the traditional bank lockbox's lifespan has been used for capturing payment data associated with payments made by check. Commercial banks provided this benefit 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 receive the paper check, process it along with the remittance data and send the data back to their customer. Because banks are processing checks and remittance this decreases the clients 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 cost. To process a huge amount of checks over time can be expensive with a lockbox.

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

 

 

Drawbacks of a Traditional Bank Lockbox



The lockbox can be rather costly . Banks typicallyacquire a monthly rate in addition to a per line rate associated withhandling payment remittance detail .

Lockboxes may contain security issues . The standard bank lockbox still requires a fair measure of manual re-keying data . With the majority of manual data entry attendance being entry level-administrative personnel who are new to the bank or an outsourced service provider . The data from the lockbox gives you all necessary components to generate a fraudulent check .

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

Standard Bank Lockboxes Are Causing problems for your Customers' AP Department . Companies are modernizing their AP Department to eradicate manual task and deciding to pay their clients electronically via ACH , Credit Card or vCard . These popular methods of ePayment are generating an increase in email remittance . FinTech solution companies have bridged the gap to helpthose firms in an economical scalable option for automating Accounts Receivable .

 

 

Benefits of a FinTech Lockbox
Reduction Cost


The primary goal of the FinTech Lockbox would be to reducecost per transaction and provide an Accounts Receivable automation tool to allowcompanies to QUICKLY clear cash and facilitate use of your working capital .

Simple payment trail
It is simple to track incoming ePayments in one place. Instead of flipping through remittance emails or heading to the vendor portal to get payment data . The AR Lockbox provides you with a single destination to house All of your incoming electronic payments produced 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 by way of the postal service . With the increase in B2B payments electronically , mail float more info is quickly turning into a productof the past . The increase in electronic payments choosing FinTech Lockboxes with a major focus on the price reduction and speed at which you clear cash and apply it to your working capital .


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