Reasons for AR Automation

accounts receivable automation

Are you aware of the benefits 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 conventional bank lockbox's lifespan has been used for capturing payment information associated with payments made by check. Commercial banks offered this benefit to improve effectiveness and flow of business transactions streamlining the accounts receivables collection process.

Customers generally 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 assists with lowering the company’s Days Sales Outstanding (DSO). Banks receive the paper check, process it along with the remittance data and send the data back to their client. 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 number of checks over time can be pricey with a lockbox.

Today, we see a big shift 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.

Weaknesses of a Traditional Bank Lockbox



The lockbox could be relatively high priced . Banks commonlyacquire a monthly rate along with a per line rate connected withhandling payment remittance detail .

Lockboxes can include security issues . The traditional bank lockbox still takes a fair level of manual re-keying data . With the majority of manual data entry attendance being entry level-administrative employees who are a novice to the bank or an outsourced service provider . The information from the lockbox gives you all crucial components to generate a fraudulent check .

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

Traditional Bank Lockboxes Are Causing difficulty for your Customers' AP Department . Corporations are modernizing their AP Department to get rid of manual process and deciding to pay their clients electronically via ACH , Credit Card or vCard . These preferred methods of ePayment are generating an increase in email remittance . FinTech solution businesses have bridged the gap to servethose companies in a cost efficient scalable option for automating Accounts Receivable .

Rewards of a FinTech Lockbox
Reduced Cost


The main objective of the FinTech Lockbox would be to reducefees per transaction and produce an Accounts Receivable automation program to helpbusinesses to QUICKLY clear cash and improve access to your working capital .

Simple payment trail
It is simple to track incoming ePayments in one place. Instead of flipping through remittance emails or going to the vendor portal to download payment data . The AR Lockbox gives you one destination to hold ALL your incoming electronic payments meant for speedier cash application .
Gets rid of mail float
Mail float is a term for the time needed for a check to travel from the payer to the payee via the postal click here service . With the increase in B2B payments electronically , mail float is rapidly becoming a thingof the past . The rise in electronic payments adopting FinTech Lockboxes with a primary focus on the rate 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 *