Blog Post
The Science of Accounts Receivable Matching: Automating the Last Mile
Getting paid is great. Figuring out what you got paid for is the hard part. Accounts receivable matching is the "last mile" problem of the order-to-cash cycle. When customers send bulk payments without remittance advice, or when wire transfer details are truncated by the bank, standard matching rules fail. This post dives into the technology—from fuzzy logic to AI—that automates this complex process.
Why Standard "Exact Match" Fails
Most ERP systems have a basic matching function. It asks: "Do we have an open invoice for exactly $1,250.00?" If yes, it matches.
But in the real world, data is messy:
- Short Payments: The customer paid $1,240 because they took a $10 damaged goods deduction.
- Combined Payments: The customer sent one check for $5,000 covering three invoices ($1,250 + $2,000 + $1,750).
- Reference Stripping: The bank truncated "Invoice #INV-98765" to "INV-98" on the statement.
The Logic of Advanced Matching
Modern AR automation tools like Reconwizz use a hierarchy of logic to solve these puzzles.
1. The Combinatorial Algorithm
This is the heavy lifter. If exact matching fails, the system looks at the open invoices for that specific customer and runs combinations. "Does Invoice A + Invoice B = Payment Amount?" It can check thousands of combinations in milliseconds to find the set that sums to the check amount.
2. Fuzzy Matching on References
Algorithms can strip away "noise" characters. If the remittance says "Inv: # 999" and the system has "INV00999", fuzzy matching recognizes them as the same entity by looking at the core numeric sequence.
3. Predictive AI
Over time, the system learns customer behavior. "Client X always takes a 2% discount if they pay within 10 days." The AI learns to predict this, auto-matching the payment and creating a "Discount Taken" journal entry for the difference.
Why This Technology Matters
By automating the matching logic, you reduce unapplied cash and improve your cash flow visibility. You stop harassing customers who have already paid, and you free your AR team to focus on true collections work.
Reconwizz brings this enterprise-grade matching logic to your finance team. Whether you have 50 invoices or 50,000, our engine ensures every payment finds its home.