A lockbox is a bank-operated address to which a company’s customers can send their payments. The primary benefit of lockbox services is increasing speed and efficiency in the accounts receivable process. The bank opens the incoming mail, deposits all received funds into the company's account, and scans the payments and any remittance information. Lockbox accounts reduce the effects of processing float and the overall cost of cash processing, which are major risks associated with cash collections. In combination with electronic transfers of account information or outsourced receivables matching, electronic payments and lockboxes will greatly reduce the level of effort required to register payments in customer accounts. Automated cash mobilization (ACM) also helps reduce the effects of processing float.
One of our leading practices to consider for your accounts payable process is to develop strategic business alliances with suppliers and involve them in developing better ways to process accounts payable.
Is The Treasury Function Ensuring Superior Financial Services for Your Company?
The treasury function at a company bears responsibility for managing financial transactions, safeguarding deposits, earning a return on reserves and obtaining credit. At a minimum, the staff of the treasury function selects and supervises providers of financial services, such as bankers and lenders, who will produce superior results at a fair price. In companies that apply leading practices, the treasury function staff develops relationships with bankers and lenders who provide more than simple banker-to-customer services: the relationships progress into collaborative business partnerships where the bankers help the company manage financial risk and develop the resources worldwide to meet its strategic financial objectives.
In recent blog posts, we’ve discussed KPIs for various processes and even gave a concise description of what they are (see Guide to Managing Mergers and Acquisitions KPIs). In this post, we’ll be looking at KPIs again and this time it’s for Accounts Receivable (AR), Credit and Collections and we have a great document on KnowledgeLeader that goes more in-depth.
Settlement risk, in its simplest form, is the risk that one party won’t hold up their end in a transaction. There are several reasons this can occur, including time delay, system failure or default, and can also include risk associated with unexpected cost and/or administrative inconvenience.
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