How to improve your cash application process

Blog | June 20, 2024

Reading time: 4 min
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You don’t have a lot of control over when you get paid by your customers – but once payment is received, it’s all on you. The clock starts now, and the efficiency and speed of your cash application process will determine both your business’s cash flow and your customer’s ability to refresh their credit.

Let’s review some practical steps that you can take to enhance your cash application process so that you can stay ahead of the curve.

Move more of your customers to digital payments

Digital payments are fast, secure and convenient. They should make up the bulk of your payment volume. One of the main goals of every payment acceptance strategy should be automation, and digital payments are much easier to automate. There is some automation possible with paper checks (Optical Character Recognition) but opening envelopes and then feeding checks into scanners to digitize them just seems ridiculous when they could be digital the whole way through.

Benefits of digital payments:

  • Speed: Digital transactions are processed faster than physical checks, reducing the time it takes for funds to clear.
  • Accuracy: Electronic payments minimize errors often associated with manual data entry.
  • Security: Digital transactions offer robust security features, reducing the risk of fraud.
  • By moving more customers to digital payments, you’ve set yourself up for a more easily automated cash application process.

By moving more customers to digital payments, you’ve set yourself up for a more easily automated cash application process.

how to improve your cash application process-benefits of digital payments

How to encourage digital payments

Even though digital payments are ultimately more convenient for you and your customer, some customers’ AP processes are overwhelmed with work and stuck in their old ways. They’re not trying to reinvent how they do things – they’re just trying to get through the day. But you can encourage your customers toward digital payments.

  • Simplify the process: Make it easy for customers to set up and use digital payment methods by hosting a billing and payments portal.
  • Educate your customers: Communicate the advantages of digital payments through newsletters, emails, and webinars. Billtrust can even run email and phone campaigns to sign customers up to use your portal.
  • Incentivize transition: Offer discounts or other incentives to customers who switch to digital payments. This can include accepting credit card payments.

Capture emailed remittance from ACH and credit cards automatically

One of the challenges accounts receivable (AR) professionals face is manually capturing emailed remittance information — a task that is both time-consuming and prone to errors. Automating this process can drastically improve efficiency and accuracy.

Keys to automating remittance capture:

  • Use OCR technology: Optical Character Recognition (OCR) technology can automatically read and extract relevant payment information from emailed remittances, including PDFs and scanned checks.
  • Direct payments to an automated inbox: Billtrust can open emailed payments automatically. We can process emailed credit card payments and capture remittance from emailed ACH payments as soon as they’re sent.

Implement a solution with a high match rate in your industry

The match rate refers to the percentage of payments that can be correctly matched to open invoices without manual intervention. Implementing a solution that has proven a high match rate for peers in your industry can significantly reduce the workload on your accounts receivable (AR) team.

Key features of high match rate solutions:

  • Advanced algorithms: Employ sophisticated algorithms capable of matching payments with invoices based on multiple criteria, such as amount, date, and reference numbers.
  • Customizable rules: Allow customization of matching rules to fit your specific business needs.
  • Learning capability: Choose solutions that learn from previous matches to improve future accuracy.

Selecting the right solution:

  • Evaluate vendors: Conduct thorough evaluations of different vendors to identify the ones that offer the highest match rates for your industry.
  • Feedback loop: Establish a feedback loop with your vendor to continuously improve the match rate based on real-world usage.
  • By implementing a solution with a high match rate, you can minimize manual interventions, accelerate the cash application process, and enhance overall efficiency.

By implementing a solution with a high match rate, you can minimize manual interventions, accelerate the cash application process, and enhance overall efficiency.

improve your cash application process-key features of high match rate solutions

Make sure your solution incorporates artificial intelligence

Artificial intelligence (AI) has become a game-changer in the realm of accounts receivable, bringing unprecedented levels of automation to the cash application process. Incorporating AI into your solution can provide several advantages.

Benefits of AI in cash application:

  • Predictive matching: AI algorithms can predict and match payments to invoices with high accuracy, even when data is incomplete or ambiguous.
  • Anomaly detection: AI can identify anomalies and flag potential errors or fraudulent activities, improving security and compliance.
  • Continuous improvement: AI systems learn and adapt over time, continually improving their performance and accuracy.

Choose a solution with intelligent exception-handling

Billtrust’s Cash Application solution is powered by an AI-matching engine that assigns a confidence score to each match. Matches that exceed the confidence score are processed automatically, but those below the confidence score are sent to an exception-handling interface.

The AI doesn’t stop there. Billtrust’s intelligent exception-handling engine makes suggestions that allow most exceptions to be handled in just a few clicks.

The cash application processes' next evolution

Digitization and automation of the cash application process has opened new opportunities for accounts receivable (AR) professionals. With radically less time spent on manual processes, AR teams can focus on strategic tasks that support the rest of the company.

And with a cash application process that is fast, efficient and accurate – the CFO can deliver free cash flow and working capital at levels that move businesses out and ahead of the competition.

Accelerate your cash flow and delight your customers with cash application process automation from Billtrust.

Discover how Billtrust's AI-powered Cash Application solution boosts your cash flow with higher invoice and remittance match rates.

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