Aspects of AR Automation

accounts receivable automation

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

Lockboxes have been around for many years and a lot of the conventional bank lockbox's lifespan has been utilized for capturing payment data associated with payments made by check. Mainstream provided this service to improve effectiveness and flow of business transactions streamlining the accounts receivables collection method.

Customers basically use the bank lockbox to receive check payments in one consistent location.

Bank lockboxes are strategically 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 customers A/R workforce and increases their efficiency. The cost of the bank lockbox is typically a monthly fee along with a per line remittance data processing cost. To process a large amount of checks over time can be pricey with a lockbox.

Today, we see a drastic 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.

Pitfalls of a Traditional Bank Lockbox



The lockbox often is relatively costly . Banks typicallyacquire a monthly fee along with a per line rate linked toprocessing payment remittance detail .

Lockboxes may contain security concerns . The standard bank lockbox still takes a decent amount of manual re-keying data . With the majority of manual data entry attendance being entry level-administrative employees who are a novice to the financial institution or an outsourced contractor . The details from the lockbox gives you all required components to produce a fraudulent check .

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

Standard Bank Lockboxes Are Creating problems for your Customers' check here AP Department . Organizations are modernizing their AP Department to get rid of manual task and opting to pay their customers 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 aidthose organizations in an economical scalable alternative for automating Accounts Receivable .

Advantages of a FinTech Lockbox
Reduction Cost


The major goal of the FinTech Lockbox will be to reducefees per transaction and produce an Accounts Receivable automation program to letcompanies to QUICKLY clear cash and facilitate use of your working capital .

Simple payment trail
It is simple to track incoming ePayments from one location. Rather than flipping through remittance emails or going to the vendor portal to get payment data . The AR Lockbox provides you with one location to hold ALL your incoming electronic payments made for swifter cash application .
Removes mail float
Mail float is a term for the time required for a check to travel from the payer to the payee by means of the postal service . With the increase in B2B payments electronically , mail float is swiftly turning into a productof the past . The increasing amount of electronic payments adopting FinTech Lockboxes with a primary focus on the fee reduction and speed at which you clear cash and apply it to your working capital .


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