Reasons for AR Automation

accounts receivable automation

Are you familiar with the benefits 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 much of the conventional bank lockbox's life has been utilized for processing payment information associated with payments made by check. Big offered this service to improve effectiveness and flow of company transactions simplifying the accounts receivables collection process.

Clients basically 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 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 customers A/R workforce and increases their productivity. The price of the bank lockbox is usually 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 huge shift with Accounts Payable Departments paying electronically. This shift to ePayments has elevated the FinTech trade with {solutions| designed with the goal of decreasing business costs of processing incoming payments.

Shortcomings of a Traditional Bank Lockbox



The lockbox can be fairly expensive . Banks commonlyacquire a monthly rate as well as a per line rate connected tohandling payment remittance detail .

Lockboxes can contain 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 data from the lockbox gives you all essential elements to generate a fraudulent check .

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

Financial Institution Lockboxes Are Creating issues for your Customers' AP Department . Companies are modernizing their AP Department to eliminate manual task and opting to pay their customers electronically via ACH , Credit Card or vCard . These popular methods of ePayment are generating an increase in email remittance . FinTech solution companies have bridged the gap here to helpthose companies in a cost effective scalable option for automating Accounts Receivable .

Advantages of a FinTech Lockbox
Reduction Cost


The major objective of the FinTech Lockbox would be to lowerfees per transaction and provide an Accounts Receivable automation program to permitcompanies 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 data . The AR Lockbox provides you with one spot for a house All of your incoming electronic payments created for swifter cash application .
Removes mail float
Mail float is a term for the time read more needed for a check to travel from the payer to the payee by way of the postal service . With the increase in B2B payments electronically , mail float is rapidly becoming a productof the past . The rise in electronic payments choosing FinTech Lockboxes with an essential focus on the rate reduction and speed at which you clear cash and apply it to your working capital .


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