Attributes of AR Automation

accounts receivable automation

Do you know 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 decades and a lot of the traditional bank lockbox's life has been utilized for capturing payment data associated with payments made by check. Big offered this amenity to improve effectiveness and flow of business transactions simplifying the accounts receivables collection method.

Customers basically 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 client. Because banks are processing checks and remittance this decreases the clients 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 large number of checks over time can be pricey with a lockbox.

Today, we see a big 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.

 

 

Shortcomings of a Traditional Bank Lockbox



The lockbox often is relatively costly . Banks commonlyearn a monthly fee as well as a per line fee linked tohandling payment remittance detail .

Lockboxes may contain security issues . The standard bank lockbox still requires a decent level of manual re-keying information . With the majority of manual data entry attendance being entry level-administrative personnel who are a novice to the bank or an outsourced service provider . The information from the lockbox gives you all crucial elements to make a fraudulent check .

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

Traditional Bank Lockboxes Are Causing problems for your Customers' get more info AP Department . Organizations 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 check here the gap to aidthose companies in a cost effective scalable solution for automating Accounts Receivable .

 

 

Rewards of a FinTech Lockbox
Reduction Cost


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

Easy payment trail
It is easy to track incoming ePayments from one place. Instead of flipping through remittance emails or going to the vendor portal to download payment information . The AR Lockbox gives you a single location to hold ALL your incoming electronic payments made for faster 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 via the postal service . With the rise in B2B payments electronically , mail float is rapidly turning into a productof the past . The increasing amount of electronic payments using FinTech Lockboxes with a primary focus on the fee reduction and speed in which you clear cash and apply it to your working capital .


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