Accounts Receivable Conversion - ARC

AAA

DEFINITION of 'Accounts Receivable Conversion - ARC'

A process that allows paper checks received in payment for an account receivable to be electronically scanned and converted into an electronic payment through the Automated Clearing House. ARC saves time and the expense of actually processing the check. Both the vendor and the bank on which the payment was drawn receive only an electronic image of the check.

INVESTOPEDIA EXPLAINS 'Accounts Receivable Conversion - ARC'

As the financial industry becomes increasingly computerized, ARC has become the norm rather than the exception for large payment processors. Prior to ARC and electronic payments, the most common method of payment was lockbox banking, in which payments are made to a post office box serviced by a bank.

ARC speeds the payment to the vendor, who otherwise would have to wait for an actualy check to be transported and processed.

RELATED TERMS
  1. Accounts Receivable - AR

    Money owed by customers (individuals or corporations) to another ...
  2. Liability

    A company's legal debts or obligations that arise during the ...
  3. Receivables Turnover Ratio

    An accounting measure used to quantify a firm's effectiveness ...
  4. Savings Account

    A deposit account held at a bank or other financial institution ...
  5. Automated Clearing House - ACH

    An electronic funds-transfer system run by the National Automated ...
  6. Lockbox Banking

    A service provided by banks to companies for the receipt of payment ...
Related Articles
  1. Fundamental Analysis

    Measuring Company Efficiency

    Three useful indicators for measuring a retail company's efficiency are its inventory turnaround times, its receivables and its collection period.
  2. The global interconnection of U.S. payment systems makes commerical and financial transfers possible.
    Economics

    Inside National Payment Systems

    Investopedia explains: The global interconnection of U.S. payment systems makes commerical and financial transfers possible.
  3. Entrepreneurship

    Small Business: Speed Up Receivables To Avoid A Cash Crunch

    Waiting for customers to pay can be a losing game. Look to factoring for quicker cash.
  4. Investing

    What does CHIPS UID mean?

    CHIPS UID stands for Clearing House Interbank Payments System Universal Identifier. This is just a fancy name for an electronic clearinghouse database system, which facilitates the transfer of ...

You May Also Like

Hot Definitions
  1. Commodity

    1. A basic good used in commerce that is interchangeable with other commodities of the same type. Commodities are most often ...
  2. Deferred Revenue

    Advance payments or unearned revenue, recorded on the recipient's balance sheet as a liability, until the services have been ...
  3. Multinational Corporation - MNC

    A corporation that has its facilities and other assets in at least one country other than its home country. Such companies ...
  4. SWOT Analysis

    A tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, ...
  5. Simple Interest

    A quick method of calculating the interest charge on a loan. Simple interest is determined by multiplying the interest rate ...
  6. Special Administrative Region - SAR

    Unique geographical areas with a high degree of autonomy set up by the People's Republic of China. The Special Administrative ...
Trading Center