Advantages of AR Automation

accounts receivable automation

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

Lockboxes have been around for decades and a lot of the conventional bank lockbox's lifespan has been utilized for capturing payment data associated with payments made by check. Commercial banks offered this benefit to improve effectiveness and flow of business transactions streamlining the accounts receivables collection process.

Customers 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 business’ Days Sales Outstanding (DSO). Banks receive the paper check, process it along with the remittance data and send the data back to their client. Because banks are processing checks and remittance this decreases the clients 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 expensive with a lockbox.

Today, we see a big change 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 is often somewhat high priced . Banks usuallyearn a monthly fee along with a per line fee linked toprocessing payment remittance detail .

Lockboxes may include security issues . The standard 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 new to the financial institution or an outsourced service provider . The data from the lockbox can provide all required elements to generate a fraudulent check .

Lockboxes don’t connect into your accounting system . Bank lockboxes process your payments and remittance data thenforward you the information . Your personnel still must input that data into your ERP to clear the cash .

Traditional Bank Lockboxes Are Creating a Problem for your Customers' AP Department . Organizations are modernizing their AP Department to eliminate manual process and preferring to pay their clients electronically via ACH , Credit Card or vCard . These desired methods of ePayment are creating an increase in email remittance . FinTech solution businesses have bridged the gap to supportthose corporations in a cost efficient scalable alternative for automating Accounts Receivable .

Pros of a FinTech Lockbox
Reduced Cost


The major objective of the click here FinTech Lockbox would be to reducecost per transaction and supply an read more Accounts Receivable automation tool to letcompanies to rapidly clear cash and improve use of your working capital .

Easy payment trail
It is easy to track incoming ePayments in one location. Rather than flipping through remittance emails or heading to the vendor portal to download payment information . The AR Lockbox gives you a single place to hold ALL your incoming electronic payments produced for quicker cash application .
Gets rid of mail float
Mail float is a term for the time required for a check to travel from the payer to the payee through the postal service . With the increase in B2B payments electronically , mail float is swiftly becoming a thingof the past . The increasing amount of electronic payments embracing FinTech Lockboxes with a primary focus on the price reduction and speed in which you clear cash and apply it to your working capital .


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