Important things about Accounts Receivable 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 a while now and a lot of the traditional bank lockbox's life has been utilized for capturing payment information associated with payments made by check. Mainstream offered this service to improve effectiveness and flow of company transactions simplifying the accounts receivables collection method.

Customers generally 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 assists with lowering the business’ 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 productivity. The cost of the bank lockbox is typically a monthly fee along with a per line remittance data processing cost. To process a large number of checks over time can be costly with a lockbox.

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

 

 

Drawbacks of a Traditional Bank Lockbox



The lockbox could be relatively expensive . Banks commonlyearn a monthly rate along with a per line rate associated withhandling payment remittance detail .

Lockboxes may contain security issues . The traditional bank lockbox still takes a decent level of manual re-keying information . With the majority of manual data entry attendance being entry level-administrative workers who are a novice to the financial institution or an outsourced contractor . The details from the lockbox can provide all required components to generate a fraudulent check .

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

Standard Bank Lockboxes Are Causing a Problem for your Customers' AP Department . Companies are modernizing their AP Department to eliminate manual task and preferring to pay their customers get more info electronically via ACH , Credit Card or vCard . These desired methods of ePayment are producing an increase in email remittance . FinTech solution companies have bridged the gap to aidthose businesses in a cost efficient scalable alternative for automating Accounts Receivable .

 

 

Pros of a FinTech Lockbox
Reduced Cost


The primary objective of the FinTech Lockbox will be to reducecost per transaction and provide an Accounts Receivable automation tool to permitorganizations to rapidly clear cash and facilitate use of your working capital .

Trouble-free payment trail
It is easy to track incoming ePayments from one location. Instead of flipping through remittance emails or heading to the vendor portal to download and read payment information . The AR Lockbox provides you with a single place to hold All of your incoming electronic payments produced for speedier 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 rapidly becoming a productof the past . The increasing amount of electronic payments choosing FinTech Lockboxes with an essential focus on the price reduction and speed at which you clear cash and apply it to your working capital .


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