You should remember that cash automation is not about managing entire accounts for receivable processes. Instead, we recommend you to revise it properly with an idea to match incoming payments with proper invoices and customer accounts. Cash application is crucial accounts receivable, which will help you match accounts and customer invoices accurately.
Even though manual processes can be faster in some cases, they are prone to mistakes that can lead to delays regarding payment postings. These errors will directly impact financial reporting and vendor payments. You should check here to learn more about importance of automation.
The moment you decide to automate cash application, you can streamline operations, gain real-time insights into cash flow and reduce errors among other things. At the same time, you will allow finance managers to drive growth, improve forecasts and make smarter decisions.
What is Cash Application Process Automation?
It is vital to remember that cash process automation uses latest technological advancements such as machine learning and artificial intelligence to deal with open invoices and incoming payments. Traditional cash application requires a financial team to match payment data with invoices, which is time consuming and prone to potential errors.
That is why you should automate the process, which will help you speed up the reconciliation of cash, reduce the time for clearing payments and minimizing errors, which will ultimately help you free resources for more challenging tasks and improve cash flow visibility.
We are talking about a crucial process that will allow you to manage both cash flow and account receivable, as mentioned above. Therefore, you can match the payments by using open invoices, which will offer you a timely posting and accurate payments altogether.
As a result, a cash application team will receive checks, wire, ACH or card payments, meaning you should match the payments by using outstanding invoices and check them out as paid to finish the process.
Although we are talking about seamless process that your financial team can handle, we recommend you to implement latest software solution to prevent potential issues such as discrepancies between deductions taken from payments and invoice amount.
You should remember that automating cash application process can help you bring cost savings, accuracy and efficiency to your organization. As mentioned above, manual applications can be prone to mistakes and time-consuming, which can lead to strained relationship with customers and delays in posting payments.
Organizations that are spending too much money on processing fees for third-party vendors, FTE expenses and bank lockbox fees understand that manual option is more expensive in the long run. Instead, you should automate the cash application, which will reduce bank lockbox fees and reliance on human factor. Therefore, you will boost productivity and get cash faster.
When you implement automated solutions, you can easily match payments accurately, post cash to ERP systems without waiting, deal with deductions and exceptions and ensure accurate reporting. That is why you should learn more about benefits of cash application automation for businesses, which will help you understand the importance.
Finally, you should remember that cash application automation will help you eliminate the requirement for manual data entry and operating costs. It means you can improve the bottom line and reduce the processing expenses, which is vital to remember.
Tips for Automating Cash Application Process
As you can see from everything mentioned above, automating the cash application process can offer you exceptional financial health and impact on overall productivity. Therefore, you should consider specific focus areas that are simple to automate. In further article, we will present you a few options.
1. Remittance Details
The main idea is to automate the capture of various remittance details across web portals, EDIs, emails and other formats. Therefore, you should accept other file formats to speed up the process such as excel, HTML, XML, JPEG, CSV, PNG and PDF among others.
2. Eliminate Lockbox Fees
The best way to reduce lockbox fees to minimum is to take advantage of AI-based OCR engines, which will prevent using in-house resources. That way, you can capture check info without waiting too much, which will increase overall productivity and efficiency. As a result, you will also reduce lockbox key-in expenses, which is important to remember.
3. Electronic Payments
When it comes to implementing electronic payments, a customer must send money remittance through EDIs or email.
Enter this site: https://www.dailymotion.com/video/xbbp68 to learn more about small business factoring. The next step is waiting for cash application team to extract them and map the payment by inputting the specific payment data, invoice number and other details included.
Instead, you can implement automation that will help you directly link payment for electronic payments, which will prevent non-standard info and dealing with incomplete invoices that will reduce the efficiency and provide you with less money than you wanted in the first place.
You should think about automating various processes, which is the crucial step for transforming your company into more productive area.
