Attributes of AR Automation

accounts receivable automation

Are you aware of 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 a while now and much of the conventional bank lockbox's lifespan has been used for processing payment information associated with payments made by check. Big offered this benefit 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 strategically placed in a central location to reduce mail delivery time, which also helps 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 productivity. The price 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 industry with {solutions| designed with the goal of decreasing business costs of processing incoming payments.

Shortcomings of a Traditional Bank Lockbox



The lockbox often is rather high priced . Banks normallyacquire a monthly fee in addition to a per line rate associated withhandling payment remittance detail .

Lockboxes can contain security issues . The standard bank lockbox still takes a fair amount of manual re-keying data . With the majority of manual data entry attendance being entry level-administrative personnel who are a novice to the financial institution or an outsourced contractor . The information from the lockbox provides all needed elements to make a fraudulent check .

Lockboxes don’t connect into your accounting program . Bank lockboxes process get more info your payments and remittance information and thensend you the information . Your personnel still must enter that information into your ERP to clear the cash .

Commercial Bank Lockboxes Are Creating a Problem for your Customers' AP Department . Companies are modernizing their AP Department to eradicate manual process and deciding to pay their customers electronically via ACH , Credit Card or vCard . These popular methods of ePayment are producing an increase in email remittance . FinTech solution companies have bridged the gap to servethose organizations in a cost effective scalable option for automating Accounts Receivable .

Features of a FinTech Lockbox
Reduced Cost


The main objective of the FinTech Lockbox would be to lowercost per transaction and produce an Accounts Receivable automation tool to letcompanies to QUICKLY clear cash and facilitate access to your working capital .

Simple payment trail
It is easy to track incoming ePayments in one place. Instead of flipping through remittance emails or going to the vendor portal to get payment information . The AR Lockbox provides you with one destination to hold ALL your incoming electronic payments created for swifter cash application .
Eliminates mail float
Mail float is a term for the time required for a check to go from the payer to the payee through the postal service . With the increase in B2B payments electronically , mail float is rapidly turning into a thingof the past . The rise in electronic payments embracing FinTech Lockboxes with a significant focus on the cost reduction and speed at which you clear cash and apply it to your working capital .


Leave a Reply

Your email address will not be published. Required fields are marked *