Benefits of using AR Automation

accounts receivable automation

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

Lockboxes have been around for decades and a lot of the traditional bank lockbox's lifespan has been utilized for processing payment information associated with payments made by check. Commercial banks provided this benefit to improve effectiveness and flow of business transactions simplifying the accounts receivables collection method.

Customers generally use 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 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 customers A/R workforce and increases their efficiency. The price of the bank lockbox is typically a monthly cost along with a per line remittance data processing cost. To process a huge 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 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 rather costly . Banks typicallyearn a monthly rate in addition to a per line rate related tohandling payment remittance detail .

Lockboxes may contain security concerns . The traditional bank lockbox still takes a fair measure of manual re-keying data . With the majority of manual data entry attendance being entry level-administrative workers who are a novice to the financial institution or an outsourced service provider . The data from the lockbox can provide all crucial elements to make a fraudulent check .

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

Standard Bank Lockboxes Are Causing a Problem for your Customers' AP Department . Businesses are modernizing their AP Department to get rid of manual task and deciding to pay their customers electronically via ACH , Credit Card or vCard . These preferred methods of ePayment are creating an increase in email remittance . FinTech solution businesses have bridged the gap to servethose corporations in an economical scalable option for automating Accounts Receivable .

Rewards of 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 QUICKLY clear cash and improve use of your working capital .

Easy payment trail
It is simple to track ar automation solutions incoming ePayments from one location. Instead of flipping through remittance emails or going to the vendor portal to get payment information . The AR Lockbox gives you one destination to house All of your incoming electronic payments made for speedier cash application .
Eliminates mail float
Mail float is a term for the time required for a check to travel from the payer to the payee by way of the postal service . With the rise in B2B payments electronically , mail float is swiftly turning into a thingof the past . The increase in electronic payments using check here FinTech Lockboxes with a major focus on the fee reduction and speed in which you clear cash and apply it to your working capital .


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