Benefits of using AR Automation

accounts receivable automation

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

Lockboxes have been around for decades and a lot of the conventional bank lockbox's life has been used for processing payment information associated with payments made by check. Commercial banks offered this benefit to improve effectiveness and flow of company transactions simplifying the accounts receivables collection process.

Clients generally use the bank lockbox to receive check payments in one consistent location.

Bank lockboxes are purposefully placed in a central location to reduce 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 customer. 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 cost along with a per line remittance data processing fee. To process a huge amount of checks over time can be expensive with a lockbox.

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

 

 

Drawbacks of a Traditional Bank Lockbox



The lockbox can be relatively costly . Banks normallyearn a monthly rate in addition to a per line fee associated withhandling payment remittance detail .

Lockboxes can include 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 employees who are new to the bank or an outsourced service provider . The data from the lockbox provides all vital elements to make 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 personnel still must input that information into your ERP to clear the cash .

Standard Bank Lockboxes Are Causing problems for your Customers' AP Department . Companies are modernizing their AP Department to eradicate manual task and deciding to pay their clients electronically via ACH , Credit Card or vCard . These preferred methods of ePayment are creating an increase in email remittance . FinTech solution companies have bridged the gap to servethose firms in a cost effective scalable solution for automating Accounts Receivable .

 

 

Features of a FinTech Lockbox
Reduction Cost


The primary objective of the FinTech Lockbox is usually to reducepricing per transaction and supply an Accounts Receivable automation tool to helpbusinesses to QUICKLY clear cash and facilitate access to your working capital .

Easy payment trail
You can easily track incoming ePayments in one place. Instead of flipping through remittance emails or heading to the vendor portal to get payment information . The AR Lockbox gives you a single place to hold All of your incoming electronic payments meant for quicker 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 by way of the postal service . With check here the rise in B2B payments electronically , mail float is rapidly turning into a productof the past . The improvement in electronic payments choosing 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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