Reasons for Accounts Receivable Automation

accounts receivable automation

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

Lockboxes have been around for many years and much of the conventional bank lockbox's life has been used for capturing payment data associated with payments made by check. Mainstream offered this benefit to improve effectiveness and flow of business transactions streamlining 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 business’ Days Sales Outstanding (DSO). Banks get the paper check, process it along with the remittance data and send the information back to their customer. 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 usually a monthly cost along with a per line remittance data processing fee. To process a large amount of checks over time can be pricey with a lockbox.

Today, we see a huge change 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.

Disadvantages of a Traditional Bank Lockbox



The lockbox can be relatively costly . Banks usuallyacquire a monthly rate as well as a per line fee associated withhandling payment remittance detail .

Lockboxes may include security issues . The standard bank lockbox still requires a fair measure of manual re-keying information . With the majority of manual data entry attendance being entry level-administrative workers who are new to the financial institution or an outsourced service provider . The data from the lockbox provides all required elements to generate a fraudulent check .

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

Traditional Bank Lockboxes Are Causing a predicament for your Customers' AP Department . Organizations are modernizing their AP Department to eliminate manual task and preferring 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 helpthose businesses in an economical scalable option for automating Accounts Receivable .

Benefits of a FinTech Lockbox
Reduction Cost


The major goal of the FinTech Lockbox is usually to reducefees per transaction and provide an Accounts Receivable automation application to allowbusinesses to rapidly clear cash and improve use of your working capital .

Easy payment trail
It is easy to track incoming ePayments from one place. Instead of flipping through remittance emails or going to the vendor portal to get payment information . The AR Lockbox gives you one spot for a house All of your incoming electronic payments created for swifter cash application .
Eliminates 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 increase in B2B payments electronically , mail float is rapidly turning into click here a thingof the past . The increasing amount of electronic payments using FinTech Lockboxes with a significant focus on the cost reduction and speed at which you clear cash and apply it to your working capital .


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