Important things about AR Automation

accounts receivable automation

Are you aware of the advantages 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 a lot of the traditional bank lockbox's life has been utilized for processing payment information associated with payments made by check. Commercial banks provided this amenity to improve effectiveness and flow of business transactions simplifying 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 reduce mail delivery time, which also assists with lowering the business’ Days Sales Outstanding (DSO). Banks receive 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 customers A/R workforce and increases their efficiency. The cost of the bank lockbox is typically a monthly cost along with a per line remittance data processing fee. To process a large number of checks over time can be expensive with a lockbox.

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

 

 

Disadvantages of a Traditional Bank Lockbox



The lockbox could be rather expensive . Banks commonlyacquire a monthly rate as well as a per line fee related toprocessing payment remittance detail .

Lockboxes can include security issues . The traditional bank lockbox still requires a fair amount of manual re-keying data . With the majority of manual data entry attendance being entry level-administrative staff who are a novice to the bank or an outsourced service provider . The information from the lockbox can provide all required elements to make a fraudulent check .

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

Financial Institution Lockboxes Are Causing here difficulty for your Customers' AP Department . Corporations are modernizing their AP Department to remove manual process and deciding to pay their customers electronically via ACH , Credit Card or vCard . These preferred methods of ePayment are creating an increase in email remittance . FinTech solution businesses have bridged the gap to supportthose corporations in a cost effective scalable alternative for automating Accounts Receivable .

 

 

Benefits of a FinTech Lockbox
Reduction Cost


The main objective of the FinTech Lockbox is usually to reducefees per transaction and produce an Accounts Receivable automation tool to helpcompanies to QUICKLY clear cash and improve access to 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 payment data . The AR Lockbox gives you one spot for a house ALL your incoming electronic payments meant for more rapid cash application .
Gets rid of mail float
Mail float is a term for the time needed for a check to go from the payer to the payee by means of the postal service . With the increase in B2B payments electronically , mail float is rapidly turning into a thingof the past . The improvement in electronic payments adopting FinTech Lockboxes with a significant focus on the rate reduction and speed in which you clear cash and apply it to your working capital .


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