As your business grows, your AR department gets increasingly busier. One of your AR team’s most important tasks is the cash application process that preserves your company’s cash flow.
The cash application process has been around for centuries. However, in the last few years, fully automated digital cash application solutions have replaced the traditional manual ways of processing payments. Cash application automation systems offer a whole host of benefits to companies, especially when implemented as part of an overall AR automation solution.
What is the Cash Application Process?
Cash application is the backbone of your company’s accounts receivable process. It refers to the task of applying payments to their corresponding customers and invoices. Payments applied to the invoices can be by cheque, debit, wire transfer, credit card, or any other method you accept. Invoices are then marked as “Paid”.
However, as simple as the process sounds, there are several steps before completion, including:
- Setting up new customer accounts
- Receiving the payment from the customer for your products or services
- Manual entry of payment information into your AR system
- Reconciling bank accounts
- Investigating discrepancies due to short payments, human error, or other reasons
Although the cash application process ensures that payments are correctly tracked with your AR system, manually going through the steps for each payment can be cumbersome and time-intensive, especially when dealing with multiple remittances at one time.
This process can be performed both manually or automatically. The faster the customer payments are matched and applied to the correct invoices, the more swiftly they can be attached to the appropriate account.
What are the Challenges in the Cash Application Process?
Cash applications carried out manually present many challenges, including:
- Time: Manually performing the cash application process can slow the time between receiving payments, applying them to the correct invoice and customer account, and depositing them into the bank
- Errors: The process is subject to human error when performed manually, causing extra time and effort backtracking to try to find the error when the books don’t balance
- Complexity: Digital payments through electronic transfer, debit payments, and credit cards add another layer of complexity to the process, on top of cash and cheques
- Scalability: As your business grows, the number of payments will ultimately increase, potentially slowing down the process even more or costing money if you need to hire support staff to handle the bottleneck
- Impacted cash flow: Manually processing payments can delay deposits in the bank, affecting your access to cash and potentially your ability to meet your payroll, operational, and other critical expenses
- Negative customer experience: When payments aren’t applied in a timely fashion, your customers may get frustrated when their payment isn’t reflected in their account
The challenges to manually applying cash are numerous and can severely impact your business. However, there is a solution to improve the process and solve these issues.
How Do You Improve the Cash Application Process?
The manual system of matching payments with a customer name and invoice number and posting it to your company’s ERP is complex, time-consuming, and prone to human error, especially as cash applications grow in complexity.
Fortunately, you can improve your cash application process with automation, which offers many significant cost-saving benefits to companies while optimizing the system for faster, more accurate processing and improved positive cash flow.
What is an Automatic Cash Application System?
An automated cash application solution completely transforms the manual cash application process into a streamlined system that optimizes the time from payment receipt to customer and invoice matching and bank deposit while improving accuracy and reliability.
ACI’s AR Assistant™ is an automated cash application solution that offers end-to-end cash application processing, including:
- Remittance and handling of diverse payment options, such as hardcopy, digital, and EDI
- Linking payment to customers
- Matching payment to invoice
- Management of preauthorized/automated bill payments
Posting can be made to any modern ERP platform, including SAP, Microsoft Dynamics GP, Oracle, PeopleSoft, JD Edwards, Lawson, Baan, Sage 300 (formerly Accpac), 4th Shift, Capp Auto, and Yardi.
AR Assistant™ increases efficiency by automatically processing payments with a touchless rate upwards of 95%, freeing up your cash flow and allowing your AR team to focus on productive activities that build your business.
How Do You Automate the Cash Application Process?
ACI’s cloud-based cash application software interfaces easily with your ERP system. Our team of Business Process Automation specialists works alongside your team through every step of the implementation process. We’ll have your system up and running in as little as 30 days, empowering you to enjoy the many benefits that our AR Assistant™ solution offers, such as:
- Increased efficiency through elimination of manual steps
- Significantly reduced processing time through AI technology
- Faster bank deposits
- Improved ROI through gains in process efficiency
- Reduction of human errors during cash processing
- An optimized customer experience that encourages repeat purchase
- Elimination of hardcopy document handling and storage
- Enhanced scalability that caps your AR cost structure
- Accurate handling of remittance processing, customer deductions, rebates, and credits
- Improved team productivity through resource reallocation
- Vital AR customer and payment data and reporting
- Mitigated compliance & financial risk by partnering with ACI, a CSAE 3416 SOC certified service provider that employs industry best practices
Experience for yourself how ACI’s AR Assistant™ automated solution can help streamline your cash application, improve cash flow, and help grow your bottom line. Click the ‘Demo’ button below today for a free demonstration!
