Unleashing Automated Cash APplication: A Guide For C-Suite Executives
![](https://b2794810.smushcdn.com/2794810/wp-content/uploads/2023/05/data-sheets-lg.png?lossy=2&strip=1&webp=1)
AUTOMATIC CASH APPLICATION TOOL
As finance executive, you understand the complexity of handling variety of order to cash solutions and manual cash applications processes. You recognize the importance of freeing resources to focus on higher value tasks such as strategy formulation and customer satisfaction. You are now likely looking for how to automate cash application and how to reap the rewards of increased efficiencies and improved accuracy in order to cash processing.
At its core, an automated cash application solution conducts incoming payments for customers by looking for matches between payments received and pending receivables. good automated cash application solution does precisely that providing single entry point for general ledger entries, invoices, bills, receipts, accounts receivables, and transactions creating streamlined and simplified system. This guide will break down the primary step-by-step process of utilizing an automated solution to pass the process of cash application more efficiently.
Step 1: Set Up Matching Rules
The basis of an automated system is the way it compares incoming payments to pending receivables. Most systems use an algorithm to account for variability within payment. For example, when customer pays an invoice, the customer may send check in the amount of the invoice plus fee for the cost of processing their payment. To enable the cash application system to recognize individual payments, the software uses matching rules that enable the system to accurately match payments to invoices. Each matching rule should be customizable and tailored to the unique needs of your organization, allowing the system to be controlled by the user.
Step 2: Optimize Workflow Automation
Once matching rules are established, use workflow automation to build process for your cash application. The goal is to develop system that can be entirely managed by the software with minimal human interaction needed. To configure the process, begin by implementing sequencing that adheres to your organizations order-to-cash policies. This will ensure the correct process steps are followed when matching payments with invoices.
Step 3: Incorporate Edits and Exceptions
Not all matching is done without human input. It is unavoidable that exceptions will occur. To account for instances of partial payments, returned payments, and varying due dates, the cash application solution must include the ability to accommodate manual edits and casework exceptions. This means that payments must be estimatable by the system at initial matting level and adjustable in the subsequent casework levels. The system must also enable exceptions to be grouped for accounting teams for further review and research, as well as enable data to be exported and integrated into an invoice adjustment system.
Step 4: Monitor Performance
Finally, the system should come with performance monitoring. This may mean the ability to track payment information in real-time via dashboard or tracking system. This helps to identify cash application trends and allows for quick decisions on any payment-related processes. It also allows for faster payment processing times and increased accuracy.
Conclusion
In conclusion, an automated cash application solution helps to streamline order-to-cash processes, allowing for increased accuracy and improved efficiency. By incorporating matching rules, optimizing workflow automation, incorporating edits and exceptions, and monitoring performance, cash application system can represent significant advance in finance executive’s ability to manage revenue cycles and provide measure of control and flexibility when managing receivables.