Risk Of Not Leveraging Software For Cash APplication Automation
CASH APPLICATION PROCESS USING AUTOMATION
it is not difficult to surmise that manual cash application process carries far greater risk than one that is automated. However, to justify the investment in any software it is important to understand specifically why the burdens associated with manual process become untenable over time.
For Business Executive or Financial Officer venturing into the world of Order to Cash (O2C) process automation, it is imperative to begin with an understanding of the risks that come with otherwise avoiding such automation. Fundamentally, the chief risk is that any manual process that requires repetitive data entry and verification is inherently prone to financial errors. This increases the rate of delinquent invoices and late payments. Further, manual input processes increase the propensity for human error, subjectivity, and the potential for fraud over an automated approach.
These associated risks are not merely hypothetical, in fact ample research demonstrates how manual processing can significantly lead to increases in period end close times, transaction costs, and exposure to risk. In the context of accounts receivable, cash application is the entry point for all things related to cash inflows and outflows. This can present costly problems if payments are misapplied, resulting in delays in processing and cash collection, not to mention increased customer service costs.
In more proactive sense, most automated cash application processes rely on automated scanning, which allows for far more accurate matching process. Deployments of software solutions allow enterprises to access highly robust data capture and exception management, along with much larger transaction throughput capacity. Additionally, such solutions have the capability to generate on-demand and scheduled reports and analytics, allowing for greater internal control, lack of manual effort, and improving time and cost burdens.
Ultimately, software automation can offer far greater efficiency when it comes to cash application, along with far greater transparency in identifying errors, tracking performance and trends, and staving off financial risk. Automation will not only save enterprises time and money in the short to long term, it also provides the opportunity to take preventive measures against human error and potential fraud.
In conclusion, cash application process relying on manual data entry, verification and errors is not only laborious and time consuming, it also carries significant risks. On the other hand, leveraging software for the automation of cash application processes, along with enhanced data capture and analytics, can dramatically increase efficiency and reduce costly errors, human generation, and fraud, ultimately providing financial risk mitigation.
