Blog Post
Cash Allocation Automation: Speed Up Your Order-to-Cash Cycle
"Unapplied Cash" is a hidden drain on your business. When payments sit in a suspense account because your AR team can't match them to an invoice, your customers' credit limits stay maxed out, and your Days Sales Outstanding (DSO) inflates. Cash allocation automation solves this by using intelligent matching to apply payments instantly, freeing up credit and boosting cash flow visibility.
The Manual Allocation Bottleneck
In a manual process, an AR clerk logs into the bank portal, downloads a statement, and then opens the ERP. They look at a payment for $15,420 from "Client X" and then search open invoices for that client to find a combination that adds up to $15,420.
This is slow, prone to error, and frustrating. Worse, if the customer short-paid by $10 or combined payments for multiple subsidiaries, the manual match fails entirely.
How Automation Works
Cash allocation software automates this matching process using advanced logic:
1. Intelligent Data Capture
The software captures remittance advice from emails, portals, and PDF attachments. It extracts invoice numbers and amounts, creating a structured data set to match against the bank feed.
2. Algorithmic Matching
The engine looks for exact matches on Invoice ID and Amount. If that fails, it looks for combinations of invoices that sum to the payment amount. It can even handle "fuzzy" matching on customer names (e.g., "ABC Corp" vs. "ABC Corporation").
3. Auto-Posting to ERP
Once a match is confirmed, the software posts the cash directly to the customer's account in the ERP, closing the invoices and updating the credit limit instantly. No manual data entry required.
Benefits of Automated Cash Application
- Reduced Unapplied Cash: Clear suspense accounts daily, not monthly.
- Faster Order Release: Customers can place new orders sooner because their credit limit is refreshed instantly.
- Lower DSO: Accurate, timely application means you know who really owes you money, focusing collections efforts on true delinquency.
Streamline Your AR with Reconwizz
Reconwizz isn't just for bank recs. Our platform includes powerful cash allocation capabilities designed for high-volume businesses.
Stop letting unapplied cash slow down your growth. Automate the match and keep your cash moving.