The Risks Of Manual Cash APplication


For finance executives looking for an efficient cash application system, manual processing of payments runs the risk of inaccuracies, lost time and resources, and security issues. Reviewing this article will provide better understanding of the risks of not using software for complete order-to-cash system.

Inefficient Existing ProcessManual cash application is both resource-intensive and time-consuming. Accounts receivable (AR) clerks must manually upload bank files and reconcile the data with customer invoices. This can mean lengthy and cumbersome process with an increase in errors. It prevents the finance organization from taking full advantage of early payment discounts and can delay customer payments, resulting in cash-flow delays.

Accuracy IssuesSince human operators are prone to errors, manual payments may lead to mistakes that are difficult to track, especially in high-volume accounts. It is also nearly impossible to manually become compliant with constantly changing accounts and regulatory requirements. It is important to recognize that mistakes impact customer satisfaction and may cause negative effect on relationships and business partnerships.

Data Security RisksWhen manually uploading files, there is an increased risk of exposing confidential customer data. As result, government-mandated record keeping presents workflow challenge for organizations using manual cash application. Furthermore, manual methods can make it difficult to adhere to data privacy regulations and keep customer information secure.

Costly ResolutionInaccurate payments are costly to the finance organization in terms of manual processing costs and penalties. Due to the high cost of investigating errors, organizations may opt to forego invoice matching. Furthermore, if the error is discovered too late, it can strain customer relationships, which impacts sales volume and customer loyalty.

The SolutionSoftware for comprehensive cash application system allows organizations to automate the end-to-end Order-to-Cash process. Automation not only removes the resource and time demand of manual processing, but also reduces the risk of errors. Additionally, automated files are more secure, reducing the risk of security issues.

By using automated solutions for cash application, organizations gain real-time access to data, increased accuracy, improved workflow standardization, and reduced costs. The system is designed to automate the complete order-to-cash cycle by seamlessly integrating with any existing Accounts Receivable (AR) platform. Automation reduces accounts receivables processing times and increases accuracy, accuracy of customer information, recurring payments, and data security.

ConclusionThe risks of not using software for cash application automation are clear. Manual data processing can lead to inaccuracies, lost time and resources, and security issues which could be detrimental to customer satisfaction and relationships. Automation allows AR teams to quickly and accurately match payments to invoices while also empowering organizations to remain compliant with changing regulations and improve security. Ultimately, the right software solution should provide complete order-to-cash system to give finance executives the peace of mind that payments are being accurately applied in secure and timely manner.