Automating the cash application process is a no-brainer for efficiency
Let’s be real: The cash application process is one of those necessary evils that every financial team has to deal with. Matching payments to invoices manually is a grind. It’s time-consuming, and worst of all, it’s prone to mistakes. When you’re running a large private equity firm or overseeing large operations, every minute counts and every error can cost you through the nose. So, why are we still stuck in the days of spreadsheets and manual work when there’s a better way to do things? Enter cash application automation.
Problems with the traditional cash application process
The typical cash application process leaves a lot to be desired. In fact, research from Financial Services Forum found that 28% of financial services organisations cite ‘mistakes from manual processes’ as their biggest pain point. Despite this, most companies are still relying on manual efforts to match incoming payments to outstanding invoices. This involves sifting through bank statements, remittance documents, and payment details to connect the dots.
Here’s where the real headaches come in…
- Manual errors: Human error is a huge issue when you’re manually handling hundreds, if not thousands, of transactions daily. A small mistake, like misreading a number or overlooking a payment, can snowball into bigger reconciliation problems down the road.
- Time-consuming: Manually matching payments takes time…A LOT of time. Analysts can spend hours each day just trying to reconcile accounts, time that could be spent on more strategic tasks.
- Delays in posting: Because the cash application process is slow, there are often delays in posting payments to the correct accounts. This affects everything from cash flow management to customer relations.
- Inconsistent reporting: Since the process is highly manual, reporting often lags and tends to be inconsistent. This can leave firms flying blind when they most need clarity, especially during critical periods like end-of-quarter financial reviews.
- Difficulty handling volume: As your company grows, so does the volume of transactions. The more transactions you have, the harder it becomes to scale this manual process without adding more people, and more complexity. This lack of scalability can put the brakes on growth and create bottlenecks in your operations.
For firms dealing with high transaction volumes or looking to scale efficiently, the traditional process simply doesn’t cut it anymore.
What’s the big deal with automating cash application?
For firms that want to scale, the days of manually reconciling payments are over. We’re talking about streamlining everything from matching incoming payments to invoices, all the way to updating your financial system with the right data. If you’re still doing this the old-school way, your team is wasting hours (if not days) on repetitive tasks that could easily be handled by an AI-powered solution. Automating your cash application with Enate can cut out 60-70% of the manual work. Imagine the time saved, not to mention the efficiency gains.
How automation works - and why it’s a game changer
With the right automation tools, like Enate’s AI-powered solution, your cash application process begins by automatically extracting documents from emails, ERP systems, and even images. Thanks to Intelligent Document Processing (IDP), the format doesn’t matter. Whether it’s a PDF, JPEG, or even a handwritten note, the system extracts and processes the information without breaking a sweat.
Once the data is in, the AI engine does the heavy lifting by reconciling payments with invoices. Instead of your team spending hours on this, Enate’s system runs a 3-way match between bank statements, remittance info, and open invoices. Even when remittance info is missing (and let’s be honest, that’s more often than we’d like), the AI handles a 2-way match, flagging any discrepancies for human review.
Reporting matters
If you’re running a financial operation, reporting is not just a nice-to-have - it’s essential for understanding your cash flow and making smart decisions. The beauty of automated cash application is the real-time reporting that comes with it. With Enate’s Power BI suite, you’re not just automating processes; you’re also gaining deep insights. Imagine having real-time, customizable reports that break down exactly where your cash is: We’re talking what’s applied, what’s unapplied, and what’s outstanding. You can spot trends, forecast cash flow, and even catch potential issues before they become problems.
It’s more than just running the numbers; it’s about transforming how you understand and control your financial performance. Detailed insights into your receivables mean you get a clear view of the road ahead, and the autonomy to change it.
A genuine route to growth
You might be thinking, "This sounds great, but what does this actually do for my bottom line?" Automation saves time and cuts down on errors. That means your team can focus on value-adding activities instead of wasting energy on tasks that AI can do faster and better. Not to mention the peace of mind that comes with knowing that your cash application is accurate, consistent and timely, every single day.
Automation doesn’t just eliminate inefficiencies; it boosts productivity across the board. You’ll see quicker turnarounds, improved financial metrics like DSO (Days Sales Outstanding), and a significant improvement in working capital. It’s not just about getting things done; it’s about getting them done right, every time.
Using cash application automation software is a no-brainer
In a world where speed, accuracy, and efficiency are King (or Queen), automating your cash application process is a no-brainer. For private equity firms and financial COOs struggling to keep operations in order or seeking a return on their investments, this is one of the smartest moves you can make.
With the right AI solution, you get to hand over the monotonous tasks to automation while gaining back time, improving accuracy, and getting powerful insights that help you run a smoother, more efficient operation. So, if you’re looking to optimize your finance department and stop wasting time on manual tasks, automating your cash application process is the way forward.
It's time to stop working harder and start working smarter.
