CHAPTER 5: CASH APPLICATION, DEDUCTIONS, AND DISPUTE MANAGEMENT
INCREASING THE AUTO-CASH SUCCESS (‘HIT’) RATE There are five primary ways to increase the auto-cash hit rate (any increase in hit rate will reduce the manual effort required): 1. Modify the algorithm that matches payments to open obligations. Enable it to group many combinations of open items dated prior to the payment date to find a match. There are also ways to detect and correct for transformation errors in the remittance advice. 2. Increase the automatic small balance write-off. 3. Ensure that the bank is presenting complete remittance information supplied by customers in a format that fits your system. 4. Educate customers on the remittance information you require. Over time, you should see improvement in the remit information and an increase in your auto-cash hit rate. 5. Invest in pre-processing software that formats remit data from your lockbox provider into a format more compatible with your auto-cash engine, thereby increasing the hit rate.
5.7 Conclusion
Today’s competitive business environment is more demanding of sellers to get it right. AR might be the first face to the customer, and therefore it is critical to provide professional customer service. Cash application must process the customer’s payments accurately and immediately to avoid collection calls being made - when in fact the customer’s payment is in a queue to be entered into their account. If there are any deductions on the customer’s payments, they must be handled quickly and professionally to maintain and even enhance the relationship with the customer.
If customer service is the focus and metrics reflect that deductions are valid, researching and eliminating the root cause of these deductions will improve customer satisfaction.
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THE ACCOUNTS RECEIVABLE SPECIALIST CERTIFICATION PROGRAM E-TEXTBOOK
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