Enter the Electronic Lockbox

Wednesday, March 05, 2014

Companies are under tremendous pressure to preserve margins, reduce costs and optimize cash flow.

One key obstacle to achieving these objectives are the problems associated with traditional paper-based receivables processes.

Aite Group reports that a whopping 74 percent of large corporations are facing a "large and growing number of exceptions and returns." Similarly, 73 percent of large corporations are negatively impacted by "incomplete or inaccurate data about accounts receivable," Aite Group reports.

The result of all these issues is that it costs corporations an average of $35 across more than 45 days to distribute paper business-to-business invoices and collect payment, according to Gartner.

Increasingly, corporations are turning to banks to help solve these receivables challenges.

Direct Insite’s cloud-based e-invoicing platform offers banks a private-label electronic lockbox solution for decreasing Days Sales Outstanding and reducing invoice delivery and collection costs.

Direct Insite’s electronic lockbox solution combines four critical capabilities:

  1. Invoice presentment: enabling billers to post invoices to a secure website. Payers then access their invoices via a password-protected mailbox.
  2. Adjustments and approvals: the platform replicates a payers workflow to allow for online review, adjustment and approval of invoices. Billers receive real-time updates on adjusted invoices for faster resolution.
  3. Payments: the platform enables payers to control the amount they pay, the payment type, and the settlement date. Combining invoice presentment and approval and payment in a single platform can drive p-card issuance and utilization – a key benefit for banks.
  4. AR integration: the platform provides billers with a remittance file for reconciliation and posting.

Migrating from paper processes to electronic invoice presentment and payment enables bank treasury clients to accelerate DSO by up to 400 percent, while potentially saving millions of dollars a year on the costs associated with presenting and collecting invoices (think: paper, postage and envelope stuffing!).

The benefits are just as compelling for banks.

Direct Insite’s electronic lockbox platform builds on a bank’s treasury management experience and complements existing paper lockbox services. What’s more, electronic lockbox meets an increasingly common treasury management requirement, strengthens customer relationships, and creates a new revenue stream.

The electronic lockbox also moves banks closer to an integrated receivables environment.

To learn more about Direct Insite’s electronic lockbox platform, e-mail me at jim.mcshea@directinsite.com.