What is cash application automation?

Cash application automation uses software to replace manual tasks involved in matching incoming payments to outstanding invoices. This technology, often powered by AI and machine learning, speeds up the process, reduces errors, and improves “hit rates” or “match rates” (the percentage of payments matched automatically).

How does AI improve the cash application process?

AI and machine learning (ML) enhance the cash application process by handling complex scenarios that simple automation cannot. AI can read unstructured remittance data (like PDFs or emails), learn customer payment patterns, and match payments even with minimal or missing information, significantly boosting matching accuracy and efficiency.

What is a cash application hit rate?

A cash application hit rate, also called a match rate, measures the percentage of incoming payments that are automatically and accurately matched to their corresponding open invoices by your software, without needing any manual review or intervention. A higher hit rate means greater AR efficiency.

What is a payment exception in cash application?

A payment exception is any payment that the system cannot automatically match to an invoice. This often happens due to missing or unstructured remittance data, short payments, or bundled payments (one payment for multiple invoices). These exceptions must be manually investigated and resolved by the AR team.

Why are virtual cards difficult to process manually?

Virtual cards are often difficult to process manually because the payment and the remittance details arrive separately, usually in an email. This forces AR teams to manually find the right email, retrieve the card information, process the payment, and then match it to the correct invoice, which is a time-consuming and error-prone process.