Reasons for Accounts Receivable Automation

accounts receivable automation

Are you familiar with 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 a while now and much of the traditional bank lockbox's lifespan has been utilized for processing 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 method.

Clients basically use 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 assists with lowering the business’ Days Sales Outstanding (DSO). Banks receive 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 productivity. The price of the bank lockbox is typically a monthly cost along with a per line remittance data processing fee. 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 shift to ePayments has elevated the FinTech industry with {solutions| designed with the goal of decreasing business costs of processing incoming payments.

Weaknesses of a Traditional Bank Lockbox



The lockbox often is relatively costly . Banks usuallyearn a monthly fee along with a per line rate connected withhandling here payment remittance detail .

Lockboxes can include security issues . The standard bank lockbox 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 new to the financial institution or an outsourced service provider . The information from the lockbox can provide all vital elements to make a fraudulent check .

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

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

Rewards of a FinTech Lockbox
Reduced Cost


The major goal of the FinTech Lockbox would be to lowerfees per transaction and produce an Accounts here Receivable automation tool to permitorganizations to QUICKLY clear cash and improve access to your working capital .

Simple 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 and read payment data . The AR Lockbox provides you with one spot for a house All of your incoming electronic payments meant for faster cash application .
Removes mail float
Mail float is a term for the time needed for a check to go from the payer to the payee from the postal service . With the increase in B2B payments electronically , mail float is rapidly turning into a thingof the past . The increase in electronic payments using 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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