Benefits of using AR Automation

accounts receivable automation

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

Lockboxes have been around for many years and much of the traditional bank lockbox's life has been utilized for processing payment data associated with payments made by check. Mainstream provided this benefit to improve effectiveness and flow of business transactions simplifying the accounts receivables collection process.

Clients basically 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 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 clients A/R workforce and increases their efficiency. The cost of the bank lockbox is usually a monthly cost along with a per line remittance data processing fee. To process a large number 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 business with {solutions| designed with the goal of decreasing business costs of processing incoming payments.

 

 

Pitfalls of a Traditional Bank Lockbox



The lockbox often is somewhat costly . Banks commonlyacquire a monthly rate as well as a per line rate linked tohandling payment remittance detail .

Lockboxes can contain security issues . The standard bank lockbox still requires a fair level of manual re-keying information . With the majority of manual data entry attendance being entry level-administrative employees who are new to the financial institution or an outsourced contractor . The read more data from the lockbox can provide all necessary elements to generate a fraudulent check .

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

Financial Institution Lockboxes Are Creating a Problem for your Customers' AP Department . Organizations are modernizing their AP Department to eliminate manual process and preferring 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 companies have bridged the gap to aidthose companies in a cost efficient scalable alternative for automating Accounts Receivable .

 

 

Pros of a FinTech Lockbox
Reduced Cost


The major goal of the FinTech Lockbox is usually to decreasefees per transaction and provide an Accounts Receivable automation tool to helporganizations to rapidly clear cash and facilitate use of your working capital .

Simple payment trail
It is simple to track incoming ePayments in one location. Rather than flipping through remittance emails or heading to the vendor portal to download payment data . The AR Lockbox gives you a single destination to house ALL your incoming electronic payments created for quicker cash application .
Removes mail float
Mail float is a term for the time needed for a check to go from the payer to the payee from the postal service . With the rise in B2B payments electronically , mail float is swiftly becoming a productof the past . The improvement in electronic payments choosing FinTech Lockboxes with a major focus on the rate reduction and speed at which you clear cash and apply it to your working capital .


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