Reasons for AR Automation

accounts receivable automation

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

Lockboxes have been around for many years and much of the conventional bank lockbox's life has been utilized for processing payment information associated with payments made by check. Big provided this service to improve effectiveness and flow of business transactions simplifying the accounts receivables collection method.

Clients generally use the bank lockbox to receive check payments in one consistent location.

Bank lockboxes are purposefully placed in a central location to decrease mail delivery time, which also helps 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 customer. 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 typically a monthly fee along with a per line remittance data processing cost. To process a large amount of checks over time can be pricey with a lockbox.

Today, we see a drastic shift 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 usually rather costly . Banks usuallyearn a monthly fee along with a per line fee linked tohandling payment remittance detail .

Lockboxes may include security concerns . The traditional bank lockbox still requires a fair amount of manual re-keying data . With the majority of manual data entry attendance being entry level-administrative employees who are a novice to the financial institution or an outsourced service provider . The details from the lockbox gives you all essential elements to generate 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 team still must enter that data into your ERP to clear the cash .

Commercial Bank Lockboxes Are Creating problems for your Customers' AP Department . Businesses are modernizing their AP Department to get rid of manual task 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 companies have bridged the gap to helpthose companies in a cost effective scalable option for automating Accounts Receivable .

Benefits of a FinTech Lockbox
Reduction Cost


The primary objective of the FinTech Lockbox is usually to reducepricing per transaction and supply an Accounts Receivable automation program to letcompanies to rapidly clear cash and facilitate access to your working capital .

Trouble-free payment trail
It is simple to track ar lockbox incoming ePayments in one place. Instead of flipping through remittance emails or going to the vendor portal to download and read payment data . The AR Lockbox provides you with one destination to house ALL your incoming electronic payments meant for speedier 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 through the postal service . With the rise in B2B payments electronically , mail float is rapidly turning into a productof the past . The rise in electronic payments adopting FinTech Lockboxes with a major focus on the rate reduction and speed at which you check here clear cash and apply it to your working capital .


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