Benefits from Accounts Receivable Automation

accounts receivable automation

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

Lockboxes have been around for decades and much of the traditional bank lockbox's life has been utilized for capturing payment information associated with payments made by check. Commercial banks provided this service to improve effectiveness and flow of business transactions simplifying the accounts receivables collection process.

Clients generally use the bank lockbox to receive check payments in one consistent location.

Bank lockboxes are purposefully placed in a central location to reduce mail delivery time, which also assists with lowering the company’s Days Sales Outstanding (DSO). Banks receive 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 efficiency. The price of the bank lockbox is usually a monthly fee along with a per line remittance data processing fee. To process a huge number 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 trade with {solutions| designed with the goal of decreasing business costs of processing incoming payments.

Downsides of a Traditional Bank Lockbox



The lockbox can be fairly high priced . Banks usuallyacquire a monthly rate along with a per line rate linked tohandling payment remittance detail .

Lockboxes may contain security issues . The traditional bank lockbox still requires a decent measure of manual re-keying data . With the majority of manual data entry attendance being entry level-administrative employees who are new to the financial institution or an outsourced contractor read more . The details from the lockbox provides all vital elements to create a fraudulent check .

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

Standard Bank Lockboxes Are Creating issues for your Customers' AP Department . Organizations are modernizing their AP Department to eliminate manual process and opting to pay their customers electronically via ACH , Credit Card or vCard . These desired methods of ePayment are generating an increase in email remittance . FinTech solution businesses have bridged the gap to assistthose firms in a cost efficient scalable alternative for automating Accounts Receivable .

Rewards of a FinTech Lockbox
Reduced Cost


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

Easy payment trail
It is easy to track incoming ePayments from one place. Rather than flipping through remittance emails or going to the vendor portal to download and read payment information . The AR Lockbox provides you with one location to house ALL your incoming electronic payments created for speedier cash application .
Eliminates mail float
Mail float is a term for the time required for a check to travel from the payer to the payee through the postal service . With the increase in B2B payments electronically , mail float is quickly turning into a thingof the past . The rise in electronic payments adopting FinTech Lockboxes with an essential focus on the fee reduction and speed in which you clear cash and apply it to your working capital .


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