Cash Application
Cash application is the accounts receivable process of matching incoming customer payments to their corresponding open invoices. This critical AR function determines which invoices a payment covers, handles partial payments and overpayments, and updates the ledger accordingly. Automated cash application uses AI and OCR to parse remittance advice, match payments with 95%+ accuracy, and reduce unapplied cash by up to 80%.
Key Details
- Processes payments from multiple channels: ACH, wire transfers, checks, lockbox, credit cards, and digital wallets
- AI-powered matching handles complex scenarios like partial payments, combined payments, and payments without remittance data
- OCR and NLP parse remittance advice documents in various formats (PDF, EDI, email) to extract invoice references
- Reduces Days Sales Outstanding (DSO) by accelerating the invoice-to-cash cycle
- Exception queues route unmatched payments to AR analysts with candidate matches and confidence scores
- Integrates with ERP systems (NetSuite, SAP, QuickBooks) for automatic posting and ledger updates
- Key metrics: match rate, unapplied cash percentage, average time-to-apply, exception resolution rate