Advantages of AR Automation

accounts receivable automation

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

Lockboxes have been around for a while now and much of the traditional bank lockbox's life has been utilized for capturing payment data associated with payments made by check. Commercial banks provided this amenity to improve effectiveness and flow of business transactions streamlining the accounts receivables collection method.

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 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 cost of the bank lockbox is usually a monthly fee along with a per line remittance data processing fee. To process a large number of checks over time can be costly with a lockbox.

Today, we see a big shift with Accounts Payable Departments paying electronically. This change to ePayments has elevated 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 often is relatively expensive . Banks typicallyearn a monthly rate as well as a per line fee connected withprocessing payment remittance detail .

Lockboxes may contain security issues . 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 workers who are a novice to the bank or an outsourced service provider . The here information from the lockbox can provide all essential components to make 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 enter that information into your ERP to clear the cash .

Standard Bank Lockboxes Are Creating difficulty for your Customers' AP Department . Businesses are modernizing their AP Department to remove manual task and preferring to pay their customers electronically via ACH , Credit Card or vCard . These preferred methods of ePayment are producing an increase in email remittance . FinTech solution companies have bridged the gap to servethose companies in a cost efficient scalable alternative for automating Accounts Receivable .

Benefits of a FinTech Lockbox
Reduced Cost


The major objective of the FinTech Lockbox will be to reducefees per transaction and provide an Accounts Receivable automation tool to helpbusinesses to QUICKLY clear cash and improve access to your working capital .

Easy payment trail
It is easy to track incoming ePayments from one place. Instead of flipping through remittance emails or going to the vendor portal to download payment information . The AR Lockbox gives you a single destination to house ALL your incoming electronic payments made for quicker 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 by way of the postal service . With the increase in B2B payments electronically , mail float is swiftly becoming a thingof the past . The improvement in electronic payments using FinTech Lockboxes with a primary focus on the price reduction and speed at which you clear cash and apply it to your working capital .


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