Risk Of Not Using Automated Cash APplication Processing Software


Cash flow is the lifeblood of any business. At the heart of cash flow efficiency lies the process of cash application the analysis, approval, and application of payments received against invoices sent. Whether using manual or automated processes, the accurate and timely application of incoming payments is essential in optimizing working capital and unlocking cash.

The decision to use manual or automated cash application processes has direct impact on an organizations overall working capital efficiency. While manual processes offer increased control and oversight, automated cash application processes offer the advantage of improved speed and accuracy, as well as cost savings.

The primary risk in not utilizing automated cash application processing software is rooted in missed opportunities for improved working capital and cash flow efficiency. By relying solely on manual processes and/or legacy systems, organizations face increased risk of delays in recognizing incoming payments, and thus decrease in the potential value of their financials. The consequences of delay can include lower accounts receivable collections and higher percentages of unapplied payments. These missed opportunities can cost an organization incurring lost capital, missed discounts, and late fees.

Organizations that rely on manual processes also face risks related to mistake-prone human workflows. Manual processes involve the tedious manual input of data and cumbersome validation of data, leading to significant opportunities for errors and lack of visibility into the cash application process. In contrast, automated cash application processing software helps streamline the back office and provide real-time visibility into cash application, improving data accuracy and payments recognition.

At the highest level, organizations that leverage automated cash application processing software have access to more efficient and seamless process with heightened visibility into the utilization of their working capital. With visibility into the collections process, higher percentages of unapplied payments and lost discounts, and missed late fees are minimized and cost savings are realized.

Safety and security are also key reasons why organizations should opt for automated cash application processing. Because manual processes involve manual data entry, automation helps reduce the risk of human error and data entry inaccuracies reducing the likelihood of misapplied cash and fraud. Automated cash application processing is generally safer and more secure than manual processes, providing organizations with an additional layer of security.

Overall, automation provides C-suite executives with visibility and control into their cash application and working capital processes, enabling them to make more informed decisions, and thus higher ROIs. By leveraging automated cash application processes, organizations have access to faster and safer processing and improved working capital, greater cost savings, and increased visibility across the order-to-cash process.