Reasons for Accounts Receivable Automation

accounts receivable automation

Are you familiar with the advantages of accounts receivable automation? Traditionally, a bank lockbox has been used by company Accounts Receivable departments to increase expediency.

Lockboxes have been around for many years and much of the conventional bank lockbox's lifespan has been utilized for capturing payment data associated with payments made by check. Mainstream provided this service to improve effectiveness and flow of company transactions streamlining the accounts receivables collection process.

Customers generally 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 business’ Days Sales Outstanding (DSO). Banks get 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 customers A/R workforce and increases their productivity. The price of the bank lockbox is usually a monthly cost along with a per line remittance data processing fee. To process a huge number of checks over time can be pricey with a lockbox.

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

Disadvantages of a Traditional Bank Lockbox



The lockbox could be fairly costly . Banks generallyearn a monthly rate as well as a per line rate associated withhandling payment remittance detail .

Lockboxes may contain security concerns . The traditional bank lockbox still requires a decent amount of manual re-keying information . With the majority of manual data entry attendance being entry level-administrative staff who are new to the bank or an outsourced service provider . The information from the lockbox provides all crucial elements to produce a fraudulent check .

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

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

Features of a FinTech Lockbox
Reduced Cost


The main objective of the FinTech Lockbox is usually to reducefees per transaction and provide an Accounts Receivable automation application to allowbusinesses to rapidly clear cash and improve use of your working capital .

Trouble-free payment trail
It is simple to track incoming ePayments from one place. Rather than flipping through remittance emails or heading to the vendor portal to download payment data . The AR Lockbox provides you with one destination to hold ALL your incoming electronic payments produced for faster cash application .
Removes mail float
Mail float is a term for the time needed for a check to go from the payer to the payee via the postal service . With the rise in B2B payments electronically , mail float is swiftly becoming a productof the past . The improvement in electronic payments adopting FinTech Lockboxes with an essential focus on the fee reduction and speed in which you clear cash and apply it to your working capital .


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