Attributes of AR Automation

accounts receivable automation

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

Lockboxes have been around for a while now and a lot of the conventional bank lockbox's life has been used for capturing payment data associated with payments made by check. Commercial banks offered this service to improve effectiveness and flow of business transactions streamlining 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 clients A/R workforce and increases their productivity. The price of the bank lockbox is typically a monthly fee 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 huge shift with Accounts Payable Departments paying electronically. This shift 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 connected withhandling payment remittance get more info detail .

Lockboxes may 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 personnel who are new to the financial institution or an outsourced contractor . The data from the lockbox can provide all required components to create a fraudulent check .

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

Financial Institution Lockboxes Are Creating problems for your Customers' AP Department . Organizations are modernizing their AP Department to eradicate manual process and preferring to pay their customers electronically via ACH , Credit Card or vCard . These preferred methods of ePayment are generating an increase in email remittance . FinTech solution businesses have bridged the gap to supportthose corporations in an economical scalable option for automating Accounts Receivable .

Pros of a FinTech Lockbox
Reduced Cost


The main goal of the FinTech Lockbox will be to lowerfees per transaction and provide an Accounts Receivable automation program more info to letbusinesses to QUICKLY clear cash and facilitate access to your working capital .

Easy payment trail
It is easy to track incoming ePayments in one location. Instead of flipping through remittance emails or going to the vendor portal to download and read payment data . The AR Lockbox gives you a single location to hold ALL 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 ar automation solutions , mail float is rapidly becoming a productof the past . The improvement in electronic payments using FinTech Lockboxes with a significant focus on the price reduction and speed in which you clear cash and apply it to your working capital .


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