Benefits of using Accounts Receivable 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 efficiency.

Lockboxes have been around for a while now and a lot of the traditional bank lockbox's life has been used for processing payment data associated with payments made by check. Mainstream provided this benefit to improve effectiveness and flow of business transactions simplifying 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 helps with lowering the business’ Days Sales Outstanding (DSO). Banks receive the paper check, process it along with the remittance data and send the data back to their customer. 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 fee along with a per line remittance data processing cost. To process a huge amount of checks over time can be pricey with a lockbox.

Today, we see a big shift 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.

Weaknesses of a Traditional Bank Lockbox



The lockbox is usually somewhat expensive . Banks usuallyacquire a monthly rate in addition to a per line fee linked tohandling payment remittance detail .

Lockboxes can include security issues . The traditional bank lockbox still requires a decent measure of manual re-keying data . With the majority get more info of manual data entry attendance being entry level-administrative workers who are a novice to the financial institution or an outsourced contractor . The data from the lockbox provides all required elements to create a fraudulent check .

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

Standard Bank Lockboxes Are Creating a predicament for your Customers' AP Department . Companies are modernizing their AP Department to get rid of manual process and deciding 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 assistthose firms in an economical scalable option for automating Accounts Receivable .

Pros of a FinTech Lockbox
Reduction Cost


The major objective of the FinTech Lockbox is usually to lowerpricing per transaction and supply an Accounts Receivable automation application to allowcompanies to rapidly clear cash and facilitate access to your working capital .

Simple payment trail
It is simple to track incoming ePayments in one location. Rather than flipping through remittance emails or going to the vendor portal to download and read payment information . The AR Lockbox gives you a single spot for a hold All of your incoming electronic payments produced for more rapid cash application .
Eliminates mail float
Mail float is a term for the time needed for a check to travel from the payer to the payee via the postal service . With the increase in B2B payments electronically , mail float is quickly turning into a productof the past . The increase in electronic payments embracing FinTech Lockboxes with a major focus on the cost reduction and speed in which you clear cash and apply it to your working capital .


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