Cash App Analyst Playbook

13 Everyday Remittance Scenarios: Unlucky for Cash Application?

This e-book is an actionable summary that drills down the challenges in remittance processing and best-practices to build a robust remittance processing workflow for checks and e-payments

CHAPTER 01

Executive Summary

Is Your Cash Application Slow And Error-prone?

Complex remittance processing could be the reason

Straight-through processing is when payments are posted against open invoices in your ERP without any manual intervention.

As per a survey by NACHA-CRF 67.5% respondents have less than 60% straight-through posting. Adoption of varied e-payment formats and non-standardized remittance details could be the reasons for these low numbers.

What Ideal Remittance Processing Should Resemble

A well-oiled assembly line

In a perfect world, the A/R department would receive all its check payments with remittance details keyed-in by the bank and all its e-payments accompanied with a standardized remittance advice that could directly be reconciled for cash posting. The direct match between the invoice numbers on the remittance and invoices would create a true straight-through process.

But we are still quite some time away from utopia. As long as multiple payment and remittance formats continue to co-exist, remittance processing is likely to require manual intervention in reading, matching, and reconciling of incoming payments

The Real Picture of Remittance Processing

Too much variability in remittance scenarios

Due to lack of any standardization, remittances continue to come from various sources and in various formats and templates. Each remittance scenario has a series of variable tasks, which prevent analysts from achieving the rhythm of an assembly line.

An AS-IS evaluation of cash application process indicates that most of variability lies in two steps:

1.Remittance fetching

2.Interpretation of data

The consequences of this variability are:

Error-prone process

A highly manual and repetitive process leads to erroneous cash posting and additional burden on analysts for resolving exceptions.

Delayed cash posting

Time consuming activities of fetching and entering data slows down the cash application process. Analysts struggle to post cash the same day during seasonal spikes.

Low employee morale

High volume of low-value tasks without any strategic impact reduce cash application analysts to cash application clerks. Their entire days are spent chasing transactions and spreadsheets.

This e-book explores 13 different remittance scenarios and the best-practices to

  • Build a robust remittance processing workflow for checks and e-payments
  • Boost employee productivity by eliminating rote, error-prone clerical tasks
  • Harness the potential of Artificial Intelligence powered technology for template-free remittance capture across emails, EDI and portal

 

 

CHAPTER 02

13 Everyday Remittance Scenarios

1. Email body

Challenges in Processing Manually

  • Analysts have to login manually to email accounts and open each remittance email
  • There is no standardized template of including remittance information in an email body
  • Analysts have to individually copy and paste the details on a spreadsheet and print emails for audits and compliance

Best Practices to Achieve Straight-through Posting with Technology

  • RPA enabled bots login securely to email inboxes using supplier-provided credentials
  • Artificial intelligence captures remittance data in emails without the need for any templates
  • Customers are identified using email domain and customer signature
  • Supports all languages

2. Email attachment

Challenges in Processing Manually

  • Attachments are of various types such as csv, word, excel, pdf
  • Each remittance format leads to a different workflow
  • Standard OCR converts text in the attachments to images and then pulls the information, leading to quality loss and low accuracy
  • Analysts have to manually download all the attachments and store them in proper location

Best Practices to Achieve Straight-through Posting with Technology

  • RPA enabled bots login securely to email inboxes using supplier-provided credentials and downloads all the attachments
  • All formats of remittance such as Word, TXT, Excel, CSV, PDF, HTML, and image files supported
  • Remittance details captured using template-free AI based technology

3. Web Portal

Challenges in Processing Manually

  • Analysts have to login manually to web portals, find the relevant invoices and download them individually
  • The remittance files are of different formats such as csv, pdf
  • Analysts have to login multiple times a day to check for payments and remittances
  • The customer portal navigation changes over-time and analysts have to stay up-to-date

Best Practices to Achieve Straight-through Posting with Technology

  • Web robots log in, then navigate to and capture remittance information from different portals and download the relevant invoices
  • Remittances supported from all kinds of customer portals, vendor portals (Amazon, Walmart, Kroger), and Accounts Payable networks (Ariba, Tradeshift)
  • Smart workflows stay up-to-date with changes in customer portal navigation and UI
  • Remittance data captured across EDI, Word, TXT, Excel, CSV, PDF, HTML, and image files

4. EDI

Challenges in Processing Manually

  • EDI files are of different types such as EDI 820, 823
  • It is not possible for humans to decode the text by reading
  • Remittances are not always embedded within the remittance header
  • There are multiple types of remittance standardizations such as ISO 20022
  • There is a character constraint for embedding remittance details

Best Practices to Achieve Straight-through Posting with Technology

  • All forms of EDI types are supported
  • Remittance details are captured and pulled even in non-standardized formats such as outside of remittance header
  • Deduction cases captured and coded into the system
  • EDI files are auto-posted to the ERP without any configuration of file type

 

5. Clubbed with e-payment

Challenges in Processing Manually

  • Limited support from banks for processing e-remittance
  • Analysts have to check manually to see if any remittance information is present
  • Often remittance details are incomplete due to limited character constraint
  • Treasury teams need to be familiar with payment types that support in-built remittance support such as Real-Time Payments, Wire and Same-day ACH

Best Practices to Achieve Straight-through Posting with Technology

  • Remittance details captured from different payment files
  • Missing remittance information auto-populated using A/R extract
  • Deduction cases captured and coded into the system
  • Payment file linked with remittance data auto-posted to the ERP

6. Check stubs

Challenges in Processing Manually

  • Analysts have to scan the checks and enter the values in a spreadsheet
  • Technologies such as OCR, software parsing and reading rectangles fail to capture accurately in case of unfamiliar templates and handwritten text
  • Lockbox key-in service provided by banks only capture limited fields and are expensive
  • Lockbox files need to be configured before posting to the ERP

Best Practices to Achieve Straight-through Posting with Technology

  • Able to capture remittance details accurately using AI-enabled template-agnostic technology
  • Captures all fields such as MICR, amount, date, invoice number from check stubs
  • Eliminates the need for lockbox key-in service and manually keying in details on spreadsheet
  • Readability improves over time through Artificial Intelligence

7. Remittance before payment

Challenges in Processing Manually

  • In cases where remittance comes before payment, analysts might apply it inaccurately
  • Rework to download/match remittance when payment arrives

Best Practices to Achieve Straight-through Posting with Technology

  • When remittance arrives prior to the payment, the remittances are aggregated and saved in the system
  • Once the payment actually arrives, it gets applied at a line-item level
  • Deduction reason codes are extracted from the remittance and deduction cases are created once the payment arrives

8. Bank statement files

Challenges in Processing Manually

  • Analysts manually login to bank portals and download the bank statements
  • Analysts have to reconcile the payments received with the bank statement
  • Analysts copy the data to spreadsheets and perform manual AR matching
  • High volume of posting errors due to error-prone A/R mapping using formulae

Best Practices to Achieve Straight-through Posting with Technology

  • Bots login to bank portals and downloads all the bank statements
  • The bank statement line-items are linked with the payments received without the need for entering data on a spreadsheet
  • The enriched file is posted directly to the ERP

9. Clubbed with claims

Challenges in Processing Manually

  • In some industries such as Insurance, A/R teams receive remittance in the form of claims
  • Analysts have to login to insurance portals and download claims documents
  • Matching with payment happens with claim number instead of invoice number
  • Brokers and partners have different workflows for processing remittances

Best Practices to Achieve Straight-through Posting with Technology

  • Bots download all the claims from insurance portals
  • Three-way matching takes place between claims, payment received and the ERP A/R extract
  • Faster cash posting leads to fewer broker complaints

10.Non-reference numbers

Challenges in Processing Manually

  • In industries such as staffing and logistics, remittances come from external systems such as vendor management systems and transport management systems
  • Instead of invoice number, remittances consist  of  non-reference numbers such as consolidated freight invoice , timesheet data and so on
  • Hugely time taking process to login to multiple systems to post cash
  • Customers are called repeatedly for sending proper remittance details, leading to poor customer experience

Best Practices to Achieve Straight-through Posting with Technology

  • In the absence of an invoice number, AI-based A/R matching matches payments to open invoices using non-reference data (such as Sales Order number, Purchase Order number, or shipment details) and partial/truncated reference numbers
  • Using three-way match between bank files, remittance and A/R extracts, cash is posted even in cases of partial/truncated reference numbers or even junk data

11. Consolidated remittance consisting of multiple invoices

Challenges in Processing Manually

  • Analysts face difficulty in identifying the corresponding payment
  • Analysts have to rely on guess work by applying rules such as oldest invoice first, highest amount first

Best Practices to Achieve Straight-through Posting with Technology

  • With the help of AI-enabled technology, invoices are linked with remittance details accurately
  • Cash is posted at a line-item level for improved cash forecasting

12. Incorrect remittance

Challenges in Processing Manually

  • Analysts are not able to match and require back and forth with the customer for proper remittance details

Best Practices to Achieve Straight-through Posting with Technology

  • AI is able to correct incorrect remittance data by cross verifying data from the ERP extract

13. Missing remittance

Challenges in Processing Manually

  • Analysts perform back-and-forth with customers for collecting missing information, thereby delaying cash posting

Best Practices to Achieve Straight-through Posting with Technology

  • Automated email with attached documents is sent to customers asking for missing remittance data
  • Cash is posted automatically once the remittance arrives
CHAPTER 03

AI-enabled Remittance Capture

End-to-end Automation For Remittance Capture

Staying future-ready with Artificial Intelligence

Artificial Intelligence transforms the remittance capture process from an ad-hoc, unstandardized set of processes to an assembly-line approach. Due to the template-free technology, it supports all forms of remittances, making it future-proof and helps your team in accepting more e-payments that tend to come with decoupled remittance details.

The key benefits associated with AI-enabled remittance capture are:

Cut costs on lockbox fees

AI-enabled OCR captures check remittance data automatically, removing any dependency on bank lockbox services or in-house resources for key-in, thereby reducing costs

Eliminate templates with an AI-based capture engine that grows smarter over time

Template-free technology based on AI captures all remittance details even when the check stub comes in a non-standardized or unfamiliar format

Achieve 95% posting rate by eliminating errors associated with manual data entry

Self-learning OCR captures data with 95% accuracy, eliminating the need for exception handling when posting check payments

Free up resources for strategic credit and collections activities

Automate manual tasks of email remittance aggregation and data reading to focus resources on strategically important A/R operations

CHAPTER 04

About HighRadius

HighRadius is a Fintech enterprise Software-as-a-Service (SaaS) company. The HighRadiusTM Integrated Receivables platform reduces cycle times in the order-to-cash process through automation of receivables and payments across credit, electronic billing and payment processing, cash application, deductions and collections.

Powered by the RivanaTM Artificial Intelligence Engine and FredaTM Virtual Assistant for order-to-cash teams, HighRadius enables organizations to leverage machine learning to predict future outcomes and automate routine labor-intensive tasks. The radiusOneTM B2B payment network allows suppliers to digitally connect with buyers, closing the loop from supplier receivable processes to buyer payable processes.

HighRadius solutions have a proven track record of optimizing cash flow, reducing days sales
outstanding (DSO) and bad debt, and increasing operational efficiency so that companies may
achieve strong ROI in just a few months. To learn more, please visit www.highradius.com

HighRadius’ Integrated Receivables Platform

Integrated Receivables optimizes accounts receivable operations by combining all receivable and payment modules into a unified business process. The Integrated Receivables platform provides solutions for credit, collections, deductions, cash application, electronic billing, and payment processing – covering the entire gamut from credit-to-cash.

The HighRadiusTM Integrated Receivables platform stands out by enabling every credit and A/R operation to execute real-time from a unified platform with an end goal of lower DSO, reduced bad-debt, and faster dispute resolution while improving efficiency and accuracy for cash application, billing, and payment processing.

HighRadiusTM Integrated Receivables leverages RivanaTM Artificial Intelligence for Accounts Receivable to convert receivables faster and more effectively by using machine learning for accurate decision making across both credit and receivable processes. The Integrated Receivables platform also enables suppliers to digitally connect with buyers via the radiusOneTM network, closing the loop from the supplier Accounts Receivable process to the buyer Accounts Payable process.