Attributes of Accounts Receivable Automation

accounts receivable automation

Are you familiar with 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 a while now and a lot of the conventional bank lockbox's life has been used for capturing payment information associated with payments made by check. Big offered this service to improve effectiveness and flow of business transactions streamlining the accounts receivables collection method.

Customers basically leverage the bank lockbox to receive check payments in one consistent location.

Bank lockboxes are strategically 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 data 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 usually a monthly fee along with a per line remittance data processing cost. To process a huge number of checks over time can be costly with a lockbox.

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

 

 

Disadvantages of a Traditional Bank Lockbox



The lockbox is often rather costly . Banks generallyacquire a monthly rate along with a per line fee linked toprocessing payment remittance detail .

Lockboxes can contain security concerns . The traditional bank lockbox still requires a fair level of manual re-keying data . With the majority of manual data entry attendance being entry level-administrative workers who more info are new to the bank or an outsourced contractor . The details from the lockbox gives you all required elements to make a fraudulent check .

Lockboxes don’t connect into your accounting program . Bank lockboxes process the payments and remittance information thenforward you the information . Your organization still must key in that information check here into your ERP to clear the cash .

Financial Institution Lockboxes Are Creating a predicament for your Customers' AP Department . Organizations are modernizing their AP Department to remove manual task and deciding to pay their customers electronically via ACH , Credit Card or vCard . These desired methods of ePayment are creating an increase in email remittance . FinTech solution companies have bridged the gap to assistthose companies in an economical scalable option for automating Accounts Receivable .

 

 

Pros of a FinTech Lockbox
Reduced Cost


The major objective of the FinTech Lockbox will be to decreasecost per transaction and provide an Accounts Receivable automation program to letbusinesses to rapidly clear cash and facilitate access to your working capital .

Easy payment trail
You can easily track incoming ePayments in one location. Rather than flipping through remittance emails or going to the vendor portal to download and read payment data . The AR Lockbox provides you with get more info a single location to hold ALL your incoming electronic payments made for swifter cash application .
Removes mail float
Mail float is a term for the time required for a check to go from the payer to the payee by means of the postal service . With the rise in B2B payments electronically , mail float is rapidly becoming a productof the past . The increase in electronic payments choosing FinTech Lockboxes with an essential focus on the cost reduction and speed at which you clear cash and apply it to your working capital .


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