Time marches on and waits for no man — or cash application process, apparently. There are many symptoms of a sick and suffering cash application process. If you’re managing that process the old fashioned way with many dedicated people scanning (and sometimes rescanning) remittances and then keying in data, it’s time to consider a new toolbox of tricks.
So sit bolt up in that straight back chair and get ready for some difficult listening. If any one of the following reasons seems familiar to you, it could be an indication that you need to take a good hard look at your cash application process. But don’t be scared because there is a way to fix it. You first need to admit you have a problem. Go ahead, say it: My cash application process needs an overhaul.
#1: The DSO number is closer to your weight than your shoe size
Consider this: Even the man with the largest feet in the world would be happy with a Day Sales Outstanding number that’s close to his shoe size. And a 50-pound eight-year-old girl would be — OMG! — mortified to see her DSO creeping up to her weight (as if!).
Child labor laws aside, modifying your cash application process to be more automated will have the side effect of lowering your DSO. Why? When your match rate goes up, the time your team spends each week managing exceptions and applying cash to customer invoices goes down. It’s simple logic. Even a third grader can figure it out.
#2: Your collection team continues to hear “I already paid that…”
Maybe your customer paid…and maybe he didn’t. You certainly can’t tell — at least not very easily. Your accounting process is a mess and your days sales outstanding (DSO) number is so out of whack that you’re not even sure how money is getting into your bank account (let alone when).
Wouldn’t it be great if you didn’t even need collectors? That everything was running so smoothly and efficiently that your customers found paying your bills — electronically, even — a breeze and a pleasure?
You’re definitely in need of a better system because it’s a guarantee that your customers are — or soon will be — sick of hearing from your collectors after they’ve paid. Spending all your time calming crabby clients is not a recommended business model.
#3: You’re telling your customers to allow longer and longer times for their payment to post
This is related to reason #2 but even if you know someone has paid, having that payment take a long time to post to the bank is more than an inconvenience — it’s impacting both parties’ bottom lines.
Put yourself in your customers’ shoes: If you made sure that you’d paid your creditors in full and on time and yet your accounting got all screwy because they took forever to deposit that check, you’d be annoyed. Don’t be surprised if you get curt emails or incomplete remittances next time around.
#4: Cash app team members are full time data keyers
Is this what you had in mind when you hired these folks? That they’d spend their time tapping numbers into a 10-key machine? You hired them for their brains — time to let them use those skills and add value elsewhere.
As mentioned in “So Happy Together,” repurposing someone from a mindless job (like keying) to one where they can apply their talents improves job satisfaction and productivity. Free the data keyers!
#5: The cash app department is so paper-heavy, you’re considering acquiring a paper supply company
The envelopes… the checks… the remittances… the invoices… ALL THAT PAPER.
If you’re printing out electronic remittances only to re-key them — stop! You’re wasting trees, time, and money. Automate your cash application process and ditch the paper trail.
#6: Lockbox data keying fees are the biggest dollar item on your services budget
When it comes to your bank’s keying services, it’s not a fair fight. Why pay for something automation can handle better and cheaper? Save those dollars. Be nimble. Wrestle smarter — not harder.
#7: Cash app employees all move into the office during your three-day month-end close
Your employees are overworked. Late nights, caffeine, and chaos shouldn’t be the norm. Automation can reclaim those hours — and their sanity. Let the month-end be a celebration, not a stress test.
Final thoughts
If you recognize any of the above signs, it’s time to rethink your process. Automating cash application is the path forward — reducing waste and improving DSO along the way.
“There is nothing more deceptive than an obvious fact.” — Arthur Conan Doyle
