Reasons for AR Automation

accounts receivable automation

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

Lockboxes have been around for many years and a lot of the traditional bank lockbox's life has been used for processing payment information associated with payments made by check. Big provided this service to improve effectiveness and flow of company transactions streamlining the accounts receivables collection method.

Customers basically leverage the bank lockbox to receive check payments in one consistent location.

Bank lockboxes are purposefully placed in a central location to reduce 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 fee. To process a large amount of checks over time can be pricey with a lockbox.

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

Disadvantages of a Traditional Bank Lockbox



The lockbox could be fairly costly . Banks generallyearn a monthly rate in addition to a per line rate linked toprocessing payment remittance detail .

Lockboxes may contain security issues . The traditional bank lockbox here still requires a decent level of manual re-keying data . With the majority of manual data entry attendance being entry level-administrative employees who are a novice to the bank or an outsourced contractor . The data from the lockbox gives you all needed components to generate a fraudulent check .

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

Commercial Bank Lockboxes Are Causing difficulty for your Customers' AP Department . Businesses are modernizing their AP Department to remove manual process and deciding to pay their customers electronically via ACH , Credit Card or vCard . These desired methods of ePayment are generating an increase in email remittance . FinTech solution companies have bridged the gap to servethose organizations in a cost effective scalable alternative for automating Accounts Receivable .

Rewards of a FinTech Lockbox
Reduction Cost


The primary goal of the FinTech Lockbox will be to reducecost per transaction and supply an Accounts Receivable automation application to helporganizations to QUICKLY clear cash and improve use of your working capital .

Easy payment trail
It is easy to track incoming ePayments in one place. Rather than flipping through remittance emails or going to the vendor portal to get payment data . The AR Lockbox gives you a single spot for a house ALL your incoming electronic payments made for quicker cash application .
Removes mail float
Mail float is a term for the time required for a check to travel from the payer to the payee by means of the postal service . With the rise in B2B payments electronically , mail float is swiftly becoming a productof the past . The rise in electronic payments choosing FinTech Lockboxes with a significant focus on the rate reduction and speed in which you clear cash and apply it to your working capital .


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