To help business partners collaborate on generating and processing invoicing and payments, a growing number of businesses are adopting digital lockboxes.
Doing so can optimize transactions and reduce the work involved in sending, receiving and reconciliating payment information, according to “Reimagining Business Payments,” a PYMNTS and Billtrust collaboration. It can also ensure payments arrive quickly and securely with remittance data integrated directly into an accounts payable (AP) or enterprise resource planning (ERP) solution.
Get the report: Reimagining Business Payments
Adopting a Digital Lockbox
A digital lockbox captures all the information that runs alongside and within transactions, logs into the websites and makes sure that cards qualify at the best possible rates, Billtrust CEO Flint Lane told PYMNTS in a February interview.
Read more: At Last, the Check’s Not ‘in the Mail:’ Digital Lockboxes Tackle B2B Payments Mail Float Problem
The boxes match up automated clearinghouse (ACH) payments with remittance details and send them back to the business in a single file that enterprise resource planning (ERP) systems can digest. Cloud-based platforms also take the onus off companies’ having to build their own accounts receivable (AR) systems.
“Any business at scale will need a digital lockbox even if they don’t quite know it,” Lane said.
Transforming Invoicing, Payments
Using a digital lockbox as a central collection and distribution point for incoming payments can lead to five transformative changes, the report found:
Improving customer satisfaction. A digital lockbox can give a client more flexibility for remittance for electronic payments, whether through email, AP systems integration or an online portal.
Cutting down manual tasks. It can automate many tasks that traditionally would be handled by accountants and other AR staff. Tasks that were once paper-based, such as invoicing, writing checks and budget reconciliation can be automated, freeing staff to tackle higher-value tasks.
Increasing flexibility. Digitizing payments processes help large businesses and small to mid-sized businesses (SMBs) simplify workflows, control costs, speed up transaction processing and reconciliation, remove manual paper processes and offer valuable spend data and insights to optimize not only their own processes but those of their business partners.
Facilitating best practices. A more transparent payments process improves visibility into working capital and the customer information it collects, such as buying habits and payment behaviors, which can provide invaluable information for future interactions.
Making problems easier to solve. They can help deal with “lost” or partial payments by making sure remittance data travels with the payment, resulting in fewer transactions being held up. This also makes for an easier bookkeeping experience as payment information goes directly into a firm’s enterprise resource planning (ERP) system or AR solution.
Optimizing Both Sides of Transactions
As the world becomes more connected and geographic proximity becomes less of a requirement for doing business, company success hinges on making sure that processes such as invoicing and payments become digitized so that payments can be made and received over long distances safely and efficiently.
The status quo of slower payments and cash application may be enough to inspire prospective customers to go elsewhere.
Digital lockboxes can help organizations not only track and expedite AR and AP processes but also optimize both sides of the payment transaction with their customers.
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