Benefits of using AR Automation

accounts receivable automation

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

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

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

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

Pitfalls of a Traditional Bank Lockbox



The lockbox can be fairly expensive . Banks normallyearn a monthly fee in addition to a per line rate related toprocessing payment remittance detail .

Lockboxes can include security issues . The standard bank lockbox still takes a decent measure of manual re-keying information . With the majority of manual data entry attendance being entry level-administrative staff who are a novice to the financial institution or an outsourced contractor . The information from the lockbox provides all crucial elements to generate a fraudulent check .

Lockboxes don’t connect into your accounting system . Bank lockboxes process website your payments and remittance data and thensend you the information . Your organization still must key in that information into your ERP to clear the cash .

Financial Institution Lockboxes Are Creating a predicament for your Customers' AP Department . Corporations are modernizing their AP Department to eliminate manual process and opting to pay their customers electronically via ACH , Credit Card or vCard . These preferred methods of ePayment are creating an increase in email remittance . FinTech solution businesses have bridged the gap to assistthose companies in a cost effective scalable option for automating Accounts Receivable .

Pros of a FinTech Lockbox
Reduced Cost


The main goal of the FinTech Lockbox is to lowerfees per transaction and supply an Accounts Receivable automation tool to helpbusinesses to QUICKLY clear cash get more info and facilitate use of your working capital .

Easy payment trail
It is more info 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 location to hold All of your incoming electronic payments made for swifter cash application .
Removes mail float
Mail float is a term for the time required 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 rapidly turning into a thingof the past . The increasing amount of electronic payments choosing FinTech Lockboxes with a major focus on the cost reduction and speed in which you clear cash and apply it to your working capital .


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