Advantages for Accounts Receivable Automation

accounts receivable automation

Are you familiar with the benefits of accounts receivable automation? Conventionally, a bank lockbox has been used by company Accounts Receivable departments to increase efficiency.

Lockboxes have been around for a while now and much of the traditional bank lockbox's life has been used for capturing 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.

Clients generally 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 assists with lowering the company’s Days Sales Outstanding (DSO). Banks get 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 fee along with a per line remittance data processing fee. To process a large amount of checks over time can be expensive with a lockbox.

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

Shortcomings of a Traditional Bank Lockbox



The lockbox is often relatively expensive . Banks commonlyearn a monthly fee as well as a per line rate related toprocessing payment remittance detail .

Lockboxes may include security concerns . The traditional bank lockbox still requires a decent measure of manual re-keying information . With the majority of manual data entry attendance being entry level-administrative workers who are a novice to the financial institution or an outsourced service provider . The information from the lockbox provides all essential elements to produce a fraudulent check .

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

Standard Bank Lockboxes Are Causing a predicament for your Customers' AP Department . Corporations are modernizing their AP Department to eliminate 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 businesses have bridged the gap to supportthose businesses in a cost effective scalable solution for automating Accounts Receivable .

Rewards of a FinTech Lockbox
Reduction Cost


The major objective of the FinTech Lockbox is usually to decreasecost per transaction and provide an Accounts Receivable automation program to letbusinesses to QUICKLY clear cash and facilitate use of your working capital .

Easy 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 payment information . The AR Lockbox gives you one place to hold ALL your incoming electronic payments made for quicker 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 by means of the postal service more info . With the increase in B2B payments electronically , mail float is rapidly turning into a productof the past . The increasing amount of electronic payments embracing FinTech Lockboxes with a primary focus on the fee reduction and speed in which here you clear cash and apply it to your working capital .


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