The constraints COVID-19 has created have accelerated an already trending movement away from checks for businesses. AFP’s 2020 Payments Survey found the percentage of B2B payments made by check was at 42% in 2019, nearly half of what it had been in 2004.
With increased digital transformation comes more opportunity for efficiency. But, for cash application, the emergence of electronic payments has actually made the process more difficult. With information coming from more channels (ACH and online, in addition to lockboxes), this means more work for your accounts receivable team.
We’ll break down three common cash application challenges AR teams face and how you can solve them with automation.
Because payments made online (through a dedicated portal or payer networks—which are emerging increasingly) enable remittance information to be captured at the time of payment, it’s possible to automate 100% of the cash application process.
With around half of B2B payments still being made offline, there’s still the question of how to automate those traditional payments. You effectively solve this issue when you have a solution that can aggregate and auto-match the remittance data for checks, ACH, and lockboxes while also enabling more of your customers to pay you online.
To achieve complete cash application automation, you should maximize your acceptance of online payments, alongside automating your matching of traditional payments.
Minimizing the tedium of cash application means freeing up your AR team to focus on other, more high-value activities like collections, contributing to DSO reduction as a result.
In giving your customers flexible payment options—by being equipped to easily handle cash application for all of their preferred payment methods—you make it easier for them to pay you which in turn motivates them to pay faster, accelerating cash conversion.
The disruption of manual and paper-based payment processes was well under way before COVID-19 happened and will definitely endure after. Making the shift towards online payments is not only great for future-proofing your business, but also for simplifying cash application.
To learn more about how you can simplify the cash application process for your AR team, watch our webinar “Solving the 3 Key Cash Application Problems” hosted with Cashbook, now available on demand.
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