Risk Of Not Having Cash APplication Software
CASH APPLICATION
At the heart of an efficient order-to-cash process lies cash application. Automating this crucial process can drastically reduce the time it takes to reconcile accounts and help companies receive payments on time. Without cash application software solution, organizations will find it extremely hard to streamline their cash collection activities and implement standardized process for allocation and reconciliation of payments.
Organizations with manual approach to cash application incur variety of operational risks. With inconsistencies in manual processing, payments may be allocated improperly and disputes may arise from customers if payments are not allocated or reconciled instantly. Additionally, with manual processing, organizations are not able to conduct analytics or identify patterns which can be valuable for managing the accounts receivable process.
Lack of automation in the cash application process intensifies the risk of mistakes and delays. Manual processes have increased overhead and require larger staff, which can lead to time-consuming methods for payment posting and reconciliation and thus, increase Accounts Receivable channel costs. Without dedicated software solution, organizations may miss out on significant cost savings they could have reaped with cash application automation.
Hiring and training temporary staff, who may not be well versed in AR processes and software, can also be risk when organizations do not have dedicated cash application software solution. Managing the data influx during periods of peak volume is major challenge. Risk may also arise when customers send in important documents such as payment proofs and remitance advices but, without proper document management system, it may be difficult to track and maintain such documents.
Cash application automation also ensures that organizations have increased visibility and control over their order-to-cash process. Having software solution can provide real-time view of AR activities and payment acceptance, monitor open transactions, and track payment outcomes quickly, helping companies maximize their cash flow. With dedicated software solution, larger volume of payments can be processed, greatly reducing the risk of manual errors and omissions.
Organizations that are looking to optimize their order-to-cash process should weig the various risks of not having software solution in place. Automating the cash application process can bring in major benefits in terms of cost reduction, improved compliance and data accuracy, increased visibility, and improved customer relationships. well-integrated, cloud-based software solution is the most effective way for organizations to maximize the efficiency of their cash application process.
