Advantages for Accounts Receivable Automation

accounts receivable automation

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

Lockboxes have been around for many years and much of the conventional bank lockbox's life has been utilized for processing payment information associated with payments made by check. Big offered this benefit to improve effectiveness and flow of company transactions simplifying the accounts receivables collection process.

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 company’s 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 fee. To process a large amount 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 trade 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 usuallyearn a monthly fee along with a per line fee connected tohandling payment remittance detail .

Lockboxes may include security concerns . The traditional bank lockbox still takes a decent amount of manual re-keying information . With the majority of manual data entry attendance being entry level-administrative employees who are new to the bank or an outsourced contractor . The data from the lockbox can provide all vital components to generate a fraudulent check .

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

Standard Bank Lockboxes Are Causing issues for your Customers' AP Department . Companies are modernizing their AP Department to remove manual task and deciding to pay their clients 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 supportthose companies in a cost efficient scalable alternative for automating Accounts Receivable .

Pros of a FinTech Lockbox
Reduced Cost


The primary objective of the FinTech Lockbox would be to reducefees per transaction and provide an Accounts Receivable automation program to permitorganizations to QUICKLY clear cash and facilitate access to your working capital .

Trouble-free payment trail
It is simple to track incoming ePayments from one place. Instead of flipping through remittance emails or going to the vendor portal to download and read payment data . The AR Lockbox provides you with a single destination to hold ALL your incoming electronic payments meant for more rapid cash application .
Gets rid of mail float
Mail float is a term for the time required for a check to go from the payer to the payee via the postal service . With the check here rise in B2B payments electronically , mail float is swiftly becoming a thingof the past . The increase in electronic payments embracing FinTech Lockboxes with a significant focus on the price reduction and speed in which you clear cash and apply it to your working capital .


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