Automate Cash Collection Process for your Business

How to Automate the Cash Collection process?

For any organization, the collection process is incredibly mundane. The team that supervises this process has to spend an hour, and this process also makes the team unmotivated to complete their work each day.

Cash collection is an essential part of any organization. The cash collection management team has to send endless reminders via email, phone calls, and more to clients who forget to pay you. Using technology, you can improve your business’s overall collections experience while boosting your team’s morale.

Here, you can learn how automated cash collection improves cash flow, minimizes invoice query times, and reduces debtor days.

Table of Contents

What is the cash collection process?

A cash collection Process is whereby an organization recovers cash or due payment from other businesses or customers for whom it has previously issued an invoice. The primary function of cash collection is to receive invoices paid on their due date.

The process also manages new payment settlements or credit terms. New payment settlements are essential as it saves companies from doubtful and bad debts. Moreover, a company with massive volumes of payments means more manual work, and it can result in a time-consuming and arduous process. It affects the overall productivity of the company

Why should you automate the cash collection process?

Many companies are implementing an order to cash Automation Software in their organization to speed up their cash collection process. With an automated cash collection process, you can receive payment faster from your customer. Your cash collection team needs to be faster to remind customers of the importance of timely payments, and their pending payments will pile up. The automation software has automated reminders that remind your customers about their past due. It uses an automated email sequence that reminds all the customers at once.

Cash flow problems make it difficult for businesses to pay their staff, supplies, and creditors. It hurts your creditworthiness, causing more problems in your business. An automated cash collection makes the accounting process less troublesome and reduces the chance of any error. With less time, your team can focus on maintaining the organization’s financial health.

Automated software also allows your team to access documents from anywhere. The software uses cloud-based platforms that enable access to accounting data on various devices from any secure location. It helps your business keep moving forward even in case of any disturbance.

If you think that your data is unreliable, you can’t make the right decision and lose your clients and customers. To provide accurate products and services, you should focus on accurate financial reporting. With the automated cash collection process, you can remove the error likely to happen because of

humans. It helps in making data more accurate. It also enables you to analyze the data, spot new trends, identify challenges, and instantly find solutions.

Ways to automate the cash collection process with automation software

Generally, you can automate your organization’s cash collection process with the help of automation software. However, many things, such as the software’s features, your business requirement, and more, help determine whether the software works for your business or not. Hence, you will need some tips while automating this process to have effective solutions. Here’s a list of ways that allow you to automate your cash collection process, including:

Use AI-based OCR Engines

Your cash handling team should use AI-based OCR engines to reduce the dependency on bank lockbox key-in fees by offering accurate capture of check stub information. It also reduces or eliminates the reliance on in-house resources. When looking for automation software services, ensure that the provider offers this feature.

Identification and Application of Reason Codes for Short-Payment

Sometimes, customers make short payments but need to share the reason code information. It causes me to generate invoices for the same item twice. Choose a software that offers a feature to identify short payments and map the customer-provided reason code to the internal reason code. It helps reduce the error on an invoice.

The capture of Remittances from Various Sources

Automated Cash collection requires software that captures remittance details from various sources, such as emails and attachments, web portals, EDIs, and more. Customers send remittances in multiple formats, including PDFs, JPED, XML, HTML, CSV, PNG, Excel, and more

Automatic Linking of Payments and Remittance for Online Transaction

People send remittances through EDIs, emails, and web portals. It makes it difficult for a team to extract these remittances and map them to the incoming payments with proper payment data, invoice numbers, and more. To avoid exceptions, you should implement automation to link payment and remittance files for online transactions.

Open Account Receivable Invoice Matching and Exception Handling

When a person works manually for an accounting process, the risk of error is high. The team may find these issues, such as incorrect invoice numbers or missing remittance information. 

It can cause delays in cash posting, so you should prevent these problems with the help of Automation Software. Use AI-based software that automates matching invoices to payments, even in exceptions.

Post Cash Directly to Your ERP

You should ensure that your software features output file generation that is compatible with any ERP system. Your software should be able to create files in various formats, including EDI, BAI, and other formats. Having software that works well with your ERP system helps reduce the manual effort to recognize the file and streamline the cash posting to the ERP system.

Study Performance Metrics and Report for Better Insight

Monitoring the cash collection process metrics helps the organization to analyze the performance of the cash collection process. It will help if you implement software that displays the day-to-day activities and analyzes KPIs. It helps organizations to make further decisions based on accurate information.

Use AI and Machine Learning

AI and machine learning algorithms help solve any challenge while using automation software. The software featuring machine learning allows it to learn about your organization independently. It saves time manually putting information about the customer’s invoice number and other data.

Identify and handle Complex Parent-Child Relationships.

Parent-child relationships make mapping payments of customers challenging. Sometimes, an organization posts sales invoices on a parent account level but deducts at the child level. You should get software that can identify and map parent-child relationships in the customer to eliminate the exception during cash posting.

Auto-match Customer' Open Invoices with Incoming Payments

The cash collection software should be able to auto-match the payments from their customer to their open invoices. This process, also known as customer identification, helps the AR team to verify the account numbers when customers make payments.

The Final Word

Many ways are available for your business to automate its Cash Collection Process. When you look for a solution, make sure that it can make your team more efficient and offers your consumers a smooth transaction experience.

With MIMOIQ, you can get trained professionals to handle the entire collection. They also help reduce the risk of fraud, theft, and cash mismanagement. You can choose multiple models, such as doorstep pickup, cash collection point, etc., that meet your business needs.

Like this article?

Share on facebook
Share on twitter
Share on linkedin

More To Explore

All

Survey Errors: Top 6 Common Mistakes and How to Avoid Them

Survey errors might occur while developing, deploying, configuring the parameters, or targeting the audience. In this article, we have listed some survey errors and how you can get away with them to ensure you get the correct data.

All

The Future of Recruitment: Top Trends to Watch Out

Recruiting is a constant process in modern-day organizations, and so should its improvement. Hiring managers should keep up with the latest trends and techniques to enable an efficient workflow. The trends change over time and demand, so you must modify the hiring funnel and workflow accordingly. To aid your search, we have listed some latest hiring trends here.