10 Steps to Better Cash Application
Achieving a 100 percent auto-cash hit ratio – the percent of payments applied to invoices on the first pass – is nearly impossible, according to John Salek, GENPACT’s vice president, business services and author of Accounts Receivable Management Best Practices. He says that auto-cash hit ratios commonly range between 70 percent and 80 percent.
It is difficult to achieve a 100 percent hit ratio for many reasons. Cash application specialists receive payment in various forms, such as checks, ACH, wire transfers, credit, debit and procurement cards, from multiple channels that include mail, lockbox, EBPP, mobile devices, phone, web portals and even in-person visits.
Multiple Payment Types and Multiple Payment Channels
The problems associated with receiving payments from multiple channels are well-documented. Remote deposit capture (RDC) vendor TransCentra, Inc.’s report, The Big Picture in Billing and Payments – Navigating Complications of the Multichannel Age, found that billers face a tangled web of disparate payment streams and document formats that require them to comply with each channel’s specific data structure and format. Insights Into Corporate Receivables, a study that WAUSAU Financial Systems commissioned the Aite Group to ...