Best thing about AR Automation

accounts receivable automation

Are you familiar with 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 lifespan has been used for processing payment data associated with payments made by check. Mainstream offered this amenity to improve effectiveness and flow of company transactions streamlining the accounts receivables collection method.

Clients basically use 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 get 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 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 expensive with a lockbox.

Today, we see a big 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 could be rather expensive . Banks generallyacquire a monthly fee in addition to a per line rate related toprocessing payment remittance detail .

Lockboxes may include security issues . The traditional bank lockbox still requires a decent level of manual re-keying information . With the majority of manual data entry attendance being entry level-administrative workers who are new to the financial institution or an outsourced service provider . The information from the lockbox provides all necessary components to create a fraudulent check .

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

Traditional Bank Lockboxes Are Creating issues for your Customers' AP Department . Businesses are modernizing their AP Department to remove manual task and opting to pay their customers electronically via ACH , Credit Card or vCard . These popular methods of ePayment are generating an increase in email remittance . FinTech solution companies have bridged the gap to helpthose organizations in an economical scalable solution for automating Accounts Receivable .

 

 

Pros of get more info a FinTech Lockbox
Reduced Cost


The main objective of the FinTech Lockbox is usually to reducepricing per transaction and provide an Accounts Receivable automation program to permitorganizations to rapidly clear cash and improve access to your working capital .

Easy payment trail
It is easy to track incoming ePayments from one location. Instead of flipping through remittance emails or heading to the vendor portal to download and read payment information . The AR Lockbox gives you a single spot for a hold ALL your incoming electronic payments produced 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 by means of the here postal service . With the increase in B2B payments electronically , mail float is rapidly turning into a productof the past . The rise in electronic payments embracing FinTech Lockboxes with a significant focus on the fee reduction and speed in which you clear cash and apply it to your working capital .


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