Cash APplication Solutions: A Comprehensive Guide From The C-Suite Perspective
Cash Application
Many organizations depend on effective cash application solutions to streamline the order-to-cash process and optimize financial performance. As C-Suite executive, investing in an automated cash application solution is critical decision. Understanding what is available, how investing in solution works, and how to measure the return are essential for making the right decision for your organization. This comprehensive guide provides the necessary information to help with this decision-making process.
What is Cash Application?
Cash application is critical component of the order-to-cash process. It is the automated process of applying payments received from customers to invoices that are due and creating an applied accounts receivable. This process has traditionally been managed manually, but automated cash application solutions have become increasingly available in recent years.
Benefits of Automated Cash Application Solutions
Investing in an automated cash application solution can offer many advantages and increase financial performance. Some of the primary benefits of an automated solution include:
1. Improved accuracy Automated cash application eliminates manual errors and eliminates the need to re-key data from remittances.
2. Greater efficiencies Automated solutions can process payments in bulk, reduce unapplied cash, and alert you to discrepancies automatically.
3. Improved customerservice Your customers can view their open invoices, payment history and statement online, and receive faster customerservice.
4. Reduced bad debt Automated solutions can identify common payment problems and alert you to collections issues quickly.
5. Improved cash flow Automation will help you get paid faster, improve cash forecasting, and increase reconciliation time.
How Does Investing in an Automated Cash Application Solution Work?
Implementing an automated cash application solution can work in three distinct phases.
Phase ? Planning: In the first phase, you and your team should determine the goals and objectives of the cash application process. This is an opportunity to evaluate current processes and create an action plan.
Phase ? Integration: This phase is centered on integrating the system with existing applications in order to maximize efficiency. During this phase, you can also establish the initial business rules that are needed to make the solution work for your organization.
Phase ? Optimization: The third phase is all about optimizing the automated cash application process. This includes mapping any new processes, training personnel on the new system, and collecting feedback from users on its performance.
Measuring the Return on Investment
Once the automation process is complete, it is important to measure the return on investment (ROI). This is done by researching the savings or improvements that have been made in the cash application process. Some of the areas to focus on are:
1. Improved accuracy How much time and effort does the team save now that manual errors have been eliminated?
2. Faster processing How much time does it take to process payments now compared to the manual process?
3. Reconciliation How much time do you save on reconciling the accounts receivable?
4. Improved customerservice How has the customer experience been enhanced?
5. Reduced bad debt What is the difference in bad debt expenses between manual and automated processing?
Making the Right Decision
Choosing the right cash application solution can be daunting task. Understanding the benefits of automation, being aware of the best practices in implementation and measuring the return on investment are all key factors in making the best decision for your organization. With the right information and comprehensive plan, you and your organization will be well on your way to optimizing the order-to-cash process and financial performance.
