Why Finance Teams struggle with Cash Application (and how to fix it)
Managing cash application can time consuming and complex process. This critical process involves matching incoming payments to the correct customer accounts and invoices, ensuring accurate financial records. However, several challenges can make cash application particularly difficult :
1. Diverse Payment Methods and Formats
- Multiple Payment Channels: Customers use various payment methods, including checks, electronic transfers, and credit cards, each generating different data formats.
- Varied Remittance Formats: Remittance information arrives in multiple formats such as PDFs, Excel files, emails, and even web portals, complicating the matching process.
2. Decoupled Remittances
- Separate Payment and Remittance Data: Often, payments are received without accompanying remittance information, requiring additional effort to link payments to the correct invoices.
3. High Volume of Transactions
- Manual Processing Burden: Handling a large number of daily transactions manually is labor-intensive and increases the risk of errors.
4. Cumbersome ERP systems
- Laborious interfaces: ERP systems are designed for applying cash to a single invoice. In isolation it is easy to post a single cash batch. Try posting cash for 500 payments in a day with customers who pay 500+ invoices and productivity falls dramatically leading to errors and frustration.
5. Deductions or Short Payments
- Payment Amounts don’t match invoices: When payment amounts don’t match invoice amounts cash application teams often have to write off the discrepancy or create a whole new workflow to resolve the underpayment.
How Cashbook Can Help
Implementing an automated solution like Cashbook can alleviate the burdens of manual cash application:
- Automation of Diverse Remittance Formats: Cashbook’s software can process various remittance formats, reducing manual effort and errors.
- Efficient Matching of Payments: The system automates the matching of payments to invoices, even when remittance data is decoupled, improving accuracy and speed.
- Handling High Transaction Volumes: Cashbook’s automation capabilities allow for efficient processing of large transaction volumes, reducing the workload on staff.
- Faster Cash Posting: Automated processes enable quicker posting of payments, enhancing cash flow and financial management.
- Integrated Deduction/Short Payment Workflow: With a single platform for cash application, deductions, collections and bank reconciliation all challenges are resolved in one location.
- Reduction of Data Entry Errors: By minimizing manual data entry, the software decreases the likelihood of errors, ensuring more reliable financial records.
By addressing these challenges through automation, businesses can transform cash application from a labor-intensive task into a streamlined process, allowing finance teams to focus on more strategic activities.
Cashbook came in and took the time to listen to, and really understand, the problems we were having. They modified their software in some instances to solve specific issues. Their flexibility and experience in cash automation, resulted in considerable improvements to the efficiency of our financial processes. Highly recommend the Cashbook team to other companies.
