Attributes of Accounts Receivable Automation

accounts receivable automation

Do you know the advantages of accounts receivable automation? Traditionally, a bank lockbox has been used by business Accounts Receivable departments to increase expediency.

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

Customers generally leverage 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 get 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 efficiency. 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 costly with a lockbox.

Today, we see a huge 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.

Weaknesses of a Traditional Bank Lockbox



The lockbox is usually rather high priced . Banks usuallyearn a monthly rate along with a per line rate connected withprocessing payment remittance detail .

Lockboxes can contain security issues . The standard bank lockbox still takes a decent level of manual re-keying data . With the majority of manual data entry attendance being entry level-administrative workers who are new to the financial institution or an outsourced service provider . The details from the lockbox gives you all crucial elements to generate a fraudulent check .

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

Financial Institution Lockboxes Are Causing a Problem for your Customers' AP Department . Companies are modernizing their AP Department to click here remove manual process and deciding to pay their clients 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 businesses in an economical scalable solution for automating Accounts Receivable .

Pros of a FinTech Lockbox
Reduction Cost


The major goal of the FinTech Lockbox is usually to decreasecost per transaction and supply an Accounts Receivable automation program to permitorganizations to QUICKLY clear cash and improve use of your working capital .

Easy payment trail
It is simple to track incoming ePayments from one location. Rather than flipping through remittance emails or going to the vendor portal to download and read payment information . The AR Lockbox gives you one destination to hold ALL your incoming electronic payments created for swifter cash application .
Eliminates mail float
Mail float is a term for the time required for a check to travel from the payer to the payee from the postal service . With the rise in B2B payments electronically , mail float is quickly becoming a productof the past . The rise in electronic payments choosing FinTech Lockboxes with a primary focus on the price reduction and speed at which you clear cash and apply it to your working capital .


Leave a Reply

Your email address will not be published. Required fields are marked *