Benefits of a automated cash application software

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Published: 20th June 2011
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In 2007-2008, when the global economy went into its worst recession since the Great Depression,

and when liquidity dried up for businesses, they were forced to optimizetheir internal cash flows and

pushed companies to explore ways to automate theiraccounts receivable processes. One such manually

intensive A/R process that can be automated is the ‘Cash Application’ process. "Challenges with

traditional A/R – Part 1" blog explains in detail the drawbacks in manual A/R processes.

Majority of companies are still not using automatic cash application software to accelerate collections

and deductions management. They are dependent on their customers’ payment processes

and schedules. This can lead to problems for organizations in today’s cash crunch environment.

Traditionally,a time lag of a few days between payment receipt and cash application was unavoidable,

but by automating the cash application process, this lag can be reduced to a few minutes.

In the past cash application processeswere manually intensive. Companies had to deal with a multitude

of forms of payments (Check, ACHorWire Transfer) across multiple lock boxes or banks.While customers

provide payment remittance details in a variety of formats,such as paper remittances, EDI documents

and emails with spread sheet attachments. Emerging trend requires the vendors to login to customer

portals to retrieve the remittance details. Compounding this challenge is the inconsistency and the lack

of detail for deductions and cash discounts. In certain cases remittance line items refer to alternate

reference numbers such as a BOL number, PO Number and others that are differentfrom the original

invoice number. MostERP system lockboxor cash application programs require a ‘‘clean’’ standardized

remittance file with direct reference to your invoice numbers to auto-apply.

If you have customers that continue to provide check and remittances in paper form, not only are

bank keying fees very expensive, but they only partially relieve the overall problem. The result

is low on-invoice hit-rate, requiring a‘human-intensive’ cash application operation that is not


With HighRadius ReceivablesRadius Cash Application Automationaddresses all the challenges faced by

a traditional cash application process.

Receivables Radius Cash Application Automation solution is composed of three key components that

enable an end-to-end cash application automation.

1. Customer Specific Rules Engine

2. Data Aggregation engine which aggregates data in multiple formats from multiple sources

3. Syndication engine to publish a single file specific to particular ERP systems such as SAP, Oracle

and JD Edwards in their required formats. This allows the ability to leverage standard ERP cash


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