Cash APplication Automation ? The Hidden Risks Of Not Taking The Plunge
Cash Application Automation Statistics
With the deluge of order to cash Softwaresolutions, Finance Executive must be discriminating in their selection process. All too often, the focus of technology selection criteria is narrowed to functionality, overlooking the financial and operational risks in deploying Softwaresolution.
Organizations that do not embrace automation of the cash application process face revenue leakages, inaccurate customer billing, and higher propensity towards customer disputes. These three inefficiencies manifest themselves in multiple ways. Subsequently, the shortcomings in the order to cash process cause profit loss, potentially damaging customer relationships, along with added operational costs of manual reconciliation.
The revenue leakage problem typically revolves around inaccurate coding. If the company does not have robust software in place to differentiate customers from their affiliated partners, misapplication of cash might go completely undetected. While it is well known that customer payments should be allocated to the exact customer name on the invoice, the task is extremely difficult to execute manually. Subsequently, customer payments are often misallocated or lost due to human error, resulting in disruption of cash flows and revenue losses.
In addition to revenue leakage, inaccurate customer billing due to manual cash application processes causes customer disputes. Customer disputes occur when customer payments are misallocated, inflated charges are billed, or duplicate invoices are sent. All of these disputes represent customerservice issue on the companies part, however, more importantly, customer disputes often cause cash flow disruption, adding to the financial strain the company is facing.
Despite having customerservice teams in-place to assist customers with disputes, the manual process of dealing with customer dispute resolution is time-consuming, requiring the use of customerservice representatives. Prolonged dispute resolution processes can drive customer loyalty away, damaging the customerservice reputation of the company. In turn, the resultant customer churn restricts growth in overall revenue.
Manual reconciliation processes lead operational inefficiencies and open up the window of opportunity for fraudulent activities. If the companies reconciliations are not close enough to the actual customer payments, organizations are exposed to inaccuracies and fraudulent activities. The cost of maintaining financial compliance increases, and organizations must adhere to stricter internal control processes.
Consequently, the cost of manual reconciliation and dispute resolution is often, at par or higher, than the cost of rolling out Softwaresolution. This brings the onus of evaluating the order to cash Softwaresolution to the C-Suite. For existing manual processes, the risk of not embracing software automation outweighs the traditional corporate resistance towards risk-taking.
In summary, every day, organizations risk losing out on revenue with manual processes for cash application, inaccurate customer billing and reconciliation, and customerservice disputes. To mitigate these risks, Finance Executive must evaluate the various order to cash Softwaresolutions to determine which solution best suits the organization. By leveraging automation, organizations are enabled to meet their financial objectives, optimize working capital, and drive the customer experience.
