Following are some best practices for cash application in order to increase cash flow with accounts receivable.
What Is ‘Cash Application’?
A cash application is when your accounts receivable associates apply a payment to the appropriate customer and invoice. This is a vital part of the accounts receivable process and ensures that payments are tracked appropriately.
What Is The Cash Application Process In Accounts Receivable?
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 applied to the appropriate account.
What Makes Manual Cash Application Complex?
Using a manual cash application process slows the time between receiving and applying a customer payment, plus it increases the risk of error. The introduction of various types of electronic payments can also make the process of cash application more difficult. Now in addition to cash and cheques, the accounts receivable team must match and apply payments from EFT (ACH), credit cards, debit payments, and other sources.
In summary, manual cash application can result in errors. In addition, it can slow down the time it takes from receiving a customer payment until it is applied to the correct customer account and ultimately deposited in the bank.
The Importance Of Cash Application:
Signs It May Need Improvement
If your business issues numerous invoices and processes all the incoming payments manually, your cash flow could be negatively impacted and access to cash delayed. That is money you could be using for payroll, operating expenses, and growth. Automating your cash application process eliminates this bottleneck for your business by turning customer payments into positive cash flow faster.
How To Improve The Cash Application Process
The cash application process can be improved with an automated solution that streamlines the time-consuming process of receiving the payment, matching the outstanding invoice, applying the payment to the appropriate account, and finally depositing the funds into the bank.
If your company struggles with cash flow management, then it’s time to consider cash application automation. A smart automation tool will speed up the accounts receivable process.
Cash Application Automation Benefits
Increased Positive Cash Flow: Gain quicker access to client payments so you can use that cash for business expenses.
Improved Accuracy: Companies that employ automated cash application processes decrease errors in recording and applying payments.
Increased Productivity: Automating cash application processes frees your accounts receivable team from tedious and time-consuming tasks and enables them to focus on other activities.
Enhanced Customer Satisfaction: Customers see that the payment they made is applied quickly and is reflected in their account balance.
As you can see, cash application automation increases efficiency in a number of areas of your business. Ultimately, it allows your business to focus on revenue-generating activities.
See how Ash Conversions can speed up your accounts receivable cash applications by automating the cash application process and unlocking your cash flow. Our system increases efficiency by automatically processing payments with a touchless rate upwards of 95%.
If you are ready to enjoy all the benefits of an automated cash application process, click the button below to reach out to us – let’s have a conversation.
