Features of Accounts Receivable 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 expediency.

Lockboxes have been around for many years and a lot of the traditional bank lockbox's life has been utilized for processing payment information associated with payments made by check. Commercial banks provided this service to improve effectiveness and flow of company transactions simplifying the accounts receivables collection process.

Customers basically leverage 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 helps with lowering the company’s Days Sales Outstanding (DSO). Banks get 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 productivity. The cost of the bank lockbox is usually a monthly cost along with a per line remittance data processing cost. To process a huge amount of checks over time can be costly with a lockbox.

Today, we see a huge change 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.

 

 

Pitfalls of a Traditional Bank Lockbox



The lockbox is often fairly high priced . Banks commonlyearn a monthly fee along with a per line rate connected withprocessing payment remittance detail .

Lockboxes may include security concerns . The standard bank lockbox still takes a fair level of manual re-keying information . With the majority of manual data entry attendance being entry level-administrative employees who are a novice to the financial institution or an outsourced contractor . The details from the lockbox can provide all crucial elements to create a fraudulent check .

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

Standard Bank Lockboxes Are Causing difficulty for your Customers' AP Department . Companies are modernizing click here their AP Department to eradicate manual task and opting to pay their clients electronically via ACH , Credit Card or vCard . These popular methods of ePayment are generating an increase in email remittance . FinTech solution businesses have bridged the gap to helpthose firms in an economical scalable solution for automating Accounts Receivable .

 

 

Pros of a FinTech Lockbox
Reduction Cost


The major objective of the FinTech Lockbox is usually to decreasefees per transaction and supply an Accounts Receivable automation tool to allowcompanies to QUICKLY 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 going to the vendor portal to download payment information . The AR Lockbox provides you with one location to house All of your incoming electronic payments meant for swifter cash application .
Removes mail float
Mail float is a term for the time needed for a check to travel from the payer to the payee by means of the postal service . With the increase in B2B payments electronically , mail float is quickly turning into a productof the past . The improvement in electronic payments embracing FinTech Lockboxes with an essential focus on the price reduction and speed at which you clear cash and apply it to your working capital .


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