The Perils Of Not Employing Automated Cash APplication In Accounts Receivables Software


Ignoring the mounting pressure from top-level executives to move away from manual processes to automated systems is risky decision for any CFO tasked with overseeing accounts receivable. Failing to adopt an automated cash application can lead to many problems, including an inefficient and chaotic accounts receivable workflow.

Finance departments are generally ill-equipped to handle the gargantuan amount of data generated by manual processing. Without automated software, they will be unable to quickly aggregate and analyze the daunting number of transactions necessary to accurately record the accounts receivables. This can lead to missed opportunities, lost revenue and inflated costs. Furthermore, manual processing will likely leave significant gaps in the data, resulting in inaccurate and incomplete records.

Without automated software, organizations can also be unable to keep up with best practices, resulting in slower payment cycles and backlog of accounts receivable. Typically, in manual-processing scenarios, they will have difficulty correctly matching payments received to the correct invoices. They may also have hard time implementing or posting cash discounts or getting payments deposited into the correct bank accounts. All of these inefficiencies lead to longer time to collect outstanding payments and thus preventing any company to realize its true potential.

Inadequate processes can also lead to increased risks for the organization, including lost payment information or higher default rates from customers. These risks can be tied to delays in update posting and cumbersome tracking of payment information. With manual processing, organizations can also unintentionally sacrifice communication or collaboration, as critical information can easily get lost or overlooked. This can result in missed opportunities and unresolved errors, creating long-term problems for any company.

Organizations that rely on manual processes can miss out on the ability to leverage technologies such as machine learning to forecast cash flows more efficiently and extract actionable insights that can have an immediate positive impact on the bottom line. Automated processes can also enable integration of accounting and billing systems, along with financial reporting systems, to streamline and improve visibility across the entire accounts receivable landscape.

The choices organizations make today will have short-term and long-term implications in accounts receivable. To ensure that companies are well-positioned to capture every opportunity and maximize every financial process, they must implement an automated cash application solution that eliminates manual processes, provides accurate results quickly, and meets the needs of their operations.

The most successful organizations are built on strategic plans that include the adoption and utilization of automated cash application software to optimize accounts receivable performance and maximize returns. Companies that fail to invest in this technology risk experiencing decline in operational efficiency, inadequate reporting and higher default rates, thus severely limiting their potential for success.