Benefits from Accounts Receivable Automation

accounts receivable automation

Are you aware of 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 offered this amenity to improve effectiveness and flow of company transactions streamlining the accounts receivables collection process.

Clients basically 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 amount of checks over time can be pricey with a lockbox.

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

Weaknesses of a Traditional Bank Lockbox



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

Lockboxes may contain security issues . 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 staff who are new to the financial institution or an outsourced contractor . The data from the lockbox gives you all needed components to make a fraudulent check .

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

Standard Bank Lockboxes Are Creating a Problem for your Customers' AP Department . Businesses are ar automation solutions modernizing their AP Department to remove manual process and opting to pay their clients electronically via ACH , Credit Card or vCard . These website preferred methods of ePayment are producing an increase in email website remittance . FinTech solution businesses have bridged the gap to helpthose firms in a cost effective scalable alternative for automating Accounts Receivable .

Pros of a FinTech Lockbox
Reduction Cost


The primary goal of the FinTech Lockbox is usually to lowerpricing per transaction and provide an Accounts Receivable automation tool to permitbusinesses to rapidly clear cash and facilitate use of your working capital .

Simple 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 provides you with a single destination to hold All of your incoming electronic payments produced for swifter cash application .
Gets rid of mail float
Mail float is a term for the time required for a check to go from the payer to the payee from 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 adopting FinTech Lockboxes with a primary focus on the cost reduction and speed at which you clear cash and apply it to your working capital .


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