Today’s businesses receive payments from a variety of sources, from website payment portals, physical checks mailed in, card payments and ACH payments. Tracking all of those funds can be challenging for already overloaded businesses, especially if they don’t have the resources to staff a large team of accounting professionals.
Cash application is the process of applying those different forms of payment to the appropriate invoices, which can be a grueling when you have hundreds or thousands of invoices and payments, time-consuming process that is prone to errors. This process becomes even more complex and grueling when the remittances associated with payments are separated and are received from a different source or at a different time. There are tools that can automate the process but it’s important to choose the right software to meet your own business’s needs. When handled correctly, cash application can improve your customer service, increasing the number of long-term loyal customers your business serves.
Offer Multiple Payment Options
The best customer service comes as a result of making things as convenient as possible for your customers. This means accepting as many payment methods as your system can handle. You may find some of your customers prefer ACH while others want to use a credit card or an online service like PayPal. It’s important to not only be able to process those payments but to have a system in place where they’re applied efficiently, even when they’re coming from multiple directions.
When cash application is a manual process, it can be impossible to avoid the occasional error. Those errors can create a customer service nightmare, with clients receiving late notices that aren’t merited. Over time, people may lose their trust in your business, choosing to go with a competitor that isn’t making such serious mistakes. If your business has physical payment types such as checks or cash coming in, they could also get lost before being deposited in your bank account. Cash application processes protect against that by allowing you to apply funds quickly and send the payment straight to the bank.
Accelerate Turnaround Times
With the right cash application practices in place, businesses can ensure funds are applied to an account quickly and correctly. If one of your employees gets a call from a customer, you’ll have the most up-to-date information in the system, which is a much more professional face to exhibit to your customers. Otherwise, your team will have to apologetically explain that sometimes it takes a while for payments to be applied after they’ve come in.
Better Use of Resources
When your valued and overworked employees spend excess time shuffling paperwork, you’re losing money on the salary you’re paying or paying overtime. Cash application procedures improve efficiency, which allows you to shift those employees to tasks that might help you win more customers and increase your business’s annual income. You’ll also be able to attract more highly-skilled workers when it comes time to hire someone new, since the work will involve a different skillset than is required for manual administrative processes.
If your business accepts a variety of payment types through different channels, cash application can be a big challenge. With the right processes in place and a set of tools to help, you can create procedures that save time without draining your resources.
This acronym which stands for “easy to do business with,” claims that the experience your customer has doing business with you significantly influences their decision on whether or not to do more business with you. An article on the Harvard Business Review reports that removing obstacles and “making it easy” for customers creates loyalty. Furthermore, the article states that an astounding 81% of customers who had a difficult time solving problems and doing business with you were more likely to say something negative about your business. Often times, business make the mistake thinking that ETDBW relates only to sales and customer service. This is not the case. ETDBW trickles through the entire customer journey including your accounts receivable process. Automating cash application reduces errors, improves efficiencies, creates happy customers and a loyal customer base.