With so many ways to pay, businesses often have money coming in from so many sources, it can be difficult to keep up. As a result, industries now place an emphasis on cash application, which is the process of matching incoming payments to the appropriate invoices. While some businesses have automated their accounting tasks, often the tools they choose fail to properly address the many payment options clients and vendors now use.
The more a business can do to speed up their cash application, the smoother their daily operations will go. Here are a few benefits of accelerating the process.
Improved Cash Flow
Cash flow can be the biggest obstacle a new business faces. It’s hard enough to get clients to pay on time so when they do pay, it’s important that the money is reflected in your account balance so you can continue to make the purchases you need to keep your business productive. Even when payments are automatically deposited into your account, a faster cash application process lets you make sure that money has been reconciled with outstanding invoices before those funds are spent.
Employees Have Updated Information
When employees look up a client’s account information, it’s important that the information be somewhat accurate in order for it to be useful. When someone calls to check on their account status, customer service representatives or billing personnel will make a much better impression if they know exactly what’s going on. Having an up-to-date system also means employees can be directed to stop services if payment hasn’t been made before going pushing the client further into debt.
More Accurate Reporting
When your bookkeeping activities fall behind, it’s impossible to pull up-to-date reports. By speeding up cash application, your business can pull a report at any time that captures all of the payments that have come in to date. This can help you whether you’re being audited or whether you’re pulling financials for a third party. If your outgoing payments are reflected in these reports, you’ll have a much more impressive report if you have as many of your incoming payments applied as possible.
As businesses try to operate more efficiently, automation is key. By finding ways to better manage cash application, accounting teams can ensure funds are applied to invoices quickly, which means their books will be up to date on an ongoing basis. This also makes it easier to pull reports that are accurate and are more likely to get positive results.