Automated Cash APplication: Explaining The Benefits For The Enterprise
Automated Cash Application
Few companies have not experienced the pains felt when processing and managing their cash-related receivables and payables. Regrettably, manual approaches to automating payments, collections, and other cash-related processes are no longer satisfactory for most firms. In its place, more sophisticated and comprehensive model known as automated cash application has become increasingly utilized. This article explores the benefits of automated cash application (ACA) solutions from the perspective of the C-Suite, highlighting the opportunities of an efficient and cost-effective order to cash cycle.
What Is Automated Cash Application?
Automated cash application (ACA) is an automated accounting and accounts receivable process that allows business to apply incoming payments quickly and accurately, expediting the order to cash process. It is designed to eliminate redundant or complex tasks carried out manually during the cash application process, and to make collection cycles faster and more streamlined. In particular, the technology automates cash-receipt postings and other transactions related to the collection of payments from customers. It works to minimize human error and minimize costs associated with data entry and customer communications.
Deploying Automated Cash Application
To deploy ACA, companies must first integrate the system into their existing accounting software. This can be accomplished with dedicated module, specialized software, or an integrator that can bridge the gap between companies ERP system and its existing software. Once the integration is complete, the system can be automated according to specific criteria, such as the accounts to be monitored, the payment type and method, and the posting rule.
The Benefits of Automated Cash Application
The most substantial benefit of automated cash application is improved efficiency in accounts receivables processing. This eliminates repetitive and mundane tasks associated with manually processing payments and accelerates invoicing and collections cycles, enabling business to move from collection to approval and payment faster.
Additionally, ACA can reduce the amount of manual resources needed for accounts receivable processing, as the system eliminates manual steps and automates their replacement. This facilitates more streamlined, accurate, and cost-effective payment process.
Finally, ACA can lead to an increased number of on-time customer payments. This is accomplished by automatically sending notices and payment reminders, letting customers know exactly when payments are due and what payment methods are accepted, and then tracking and reminding customers when payments have not been made on time. Not only does this increase on-time payments, but by leveraging customers payment pattern, business can better forecast cash flow and improve their working capital position.
In conclusion, automated cash application is an invaluable tool for streamlining and simplifying accounts receivable processing. By eliminating mundane tasks, companies can save time and money while increasing customersatisfaction. As customer requirements become more stringent and the competition more fierce, the decision to deploy ACA is wise one for the C-Suite.
