10 Simple Tips to Automate Cash Application Process

What you’ll learn

  • Learn how automating cash simplifies and accelerates cash posting process by up to 90%.
  • Discover how automating cash application can help your team perform higher value-added functions.
  • Understand the benefits of automatic remittance data capture and minimize manual exception handling.
  • Learn how automating cash simplifies and accelerates the cash posting process by up to 90%.


Importance of Cash Application Process

The Cash Application Process is an important and often overlooked part of Receivables Management. Timeliness and accuracy are two key metrics looked at to measure the effectiveness of a company’s cash application process. If payments are not posted accurately and timely, inefficiencies are created in the downstream processes that include Credit, Collections, and Deduction Management. It can also have a negative impact on a company’s Day Sales Outstanding (DSO) which is a key financial ratio that illustrates how well a company’s Accounts Receivable are being managed. This process represents a great opportunity to improve efficiencies through automation.

Challenges Faced in Cash Application Process

The cash application process is highly manual, time-consuming, costly, and error-prone. Companies receive many forms of payment (check, ACH, wire transfer) across multiple lockboxes or banks and customers often provide inconsistent remittance detail in a variety of formats (paper, EDI, email attachments, online portals). On top of this inefficiency, the cost of paying the bank to key in data from paper remittances can be very high and only partially address the problem.  Also, as you know, remittance line items can sometimes refer to alternative reference numbers that are not on the original invoice.

Audit and compliance issues arise when a company is sitting on unapplied or improperly applied cash, making accuracy and efficiency all the more critical. Knowing all of this, the Encyclopedia of Credit offers 10 tips/benefits on automatically applying cash:

  1. The use of automating cash application software to process customer payments enables the cash application team to perform higher value-added functions.
  2. A 50% auto cash processing rate would be considered low.
  3. With effort, automating cash rates can climb to 90% or higher.
  4. One benefit is that much of the drudgery of cash applications can be eliminated using auto cash.
  5. Automating cash both simplifies and dramatically accelerates the cash posting process, making possible better credit decisions based on more current information.
  6. Another benefit of automating cash application is that this automation process should result in cost savings including the possibility of headcount reductions in cash application.
  7. Automating cash enables cash application personnel to focus on higher-value activities such as addressing disputes and deductions more quickly.
  8. The benefits of automating cash include the fact that by using auto cash, the cash application handles only exceptions. An exception is a payment that did not post automatically.
  9. Understanding why certain customer payments cannot be matched means that the cash application team can either (a) change their system to improve its auto cash hit rate, or (b) discuss with customers specific changes that would result in a higher auto cash rate.
  10. This is proven technology. It is nowhere near the leading edge.

How Does an AI-Enabled Solution Work?


Artificial Intelligence-enabled data capture for remittances and auto-linking of payments with open invoices eliminates errors due to manual entry. ERP agnostic SaaS infrastructure enables easy compatibility with any system.

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