CNBS Software Blog

SAP Lockboxes and AR Payment Portals

Written by Philippe Jardin | Sep 10, 2020 6:25:11 PM

Many SAP customers use lockboxes to reduce the effort of processing payments from their customers. Lockboxes are usually set up at bank branches and located near places with a high concentration of customers. Customers send their payments directly to the lockbox – a bank managed post office mailbox. Bank employees collect the payments from the mailbox, process them and send an update of all the deposits to your SAP system for a daily reconciliation.  

Advantages 

One of the main advantages in using a lockbox system is that the customer payments are collected faster (as the checks arrive directly at the bank) and you do not have to open the mail, match the payments to your invoices, prepare a deposit, take it to the bank and wait for the checks to clear. Lockboxes do allow for more complex transactions like partial payments and deposits on account.  

Disadvantages 

Your bank will charge you for the lockbox. Mostly, this charge will be based on the number of transactions, but this is not always the case. Depending on the fee structure, the number and the average transaction amount, a lockbox may turn out to be quite expensive. 

 Processing of the payments by the bank staff involves manually opening each envelope and entering the data thus increasing the chance for human error as well as fraud.  Any error has the additional cost of having to spend extra time on reconciliations to match the payments received to the correct customers and outstanding invoices in your SAP system. Another disadvantage is that there are multiple steps required to set up the proper integration of your SAP system with the bank (this is done configuring the lockbox functionality in SAP and setting up an EDI system). 

 Regardless of how payment is being processed, customers still expect a user-friendly website where they can view their paid/outstanding invoices and their due dates. Many SAP customers implement third party solutions or build a web solution in-house to provide this service to their customers. 

Turning today’s AR problems into tomorrow’s advantage  

With the recent shift to online payments, SAP integrated payment portals provide a great alternative to mailing checks. Payment portals like CNBS ePay provide a unique opportunity to replace lockbox with a web-based payment portal where customers can view and pay their invoices using credit cards or eChecks/ACH transfers. 

 Payment portals can handle a variety of complex scenarios such as partial payments, accepting deposits as well as allowing an easy way to pay invoices for multiple business units. Portals provide a secure, PCI compliant way to receive payments faster with minimal manual processing. 

 When portals are integrated with SAP in real time, there is no need for middleware or EDI systems to manage. They also replace the need for separate lockboxes and customer facing portals with a single solution which internally reduces the burden on IT as well as reduces the risks (as there are no third parties involved in collecting and processing customer payments). 

Because customers select the invoices they want to pay online, there are no reconciliations to be done. This reduces costs and resources required to process accounts receivables, allowing your team to focus on more value-added tasks. In addition, Payment Portals provide customers with downloadable pdf versions of their invoices as well as a proof of payment. Customers can also export their transaction history to Excel spreadsheets for additional analysis. 

 If you want to learn more about SAP Payment Portals, see one in action and find out how they can help your business, please visit our ePay Portal web site. 

Want to learn more about SAP payment portals? Check out ePay Payment Portal.