Last post we started with a recap on the processes in accounts receivable (AR) / order to cash (O2C)
AR is an important function, as the processes directly affect the customers of your client. Customers – means revenue streams, and dissatisfaction with this group of entities – loss of business.
I gave you a list of functions in the last post, there are normally two categories of processes, voice based and non-voice based. We will focus on non-voice processes and today I will pick up the most outsourced function in this group – “Cash Applications”
When you do accounting, and you receive money from a customer, you normally make an entry for the receipts, isn’t it?
So, the entry would be:
Cash / Bank A/c Dr. xxxxxxx
To Customer’s Account xxxxxxx
Sound’s simple. Then why is this such a critical process and why do you see back-office units deploy a multiple set of resources for this process?
For smaller organizations these do not normally pose a problem, but for some larger organizations, I have seen millions of dollars in unapplied cash.
More in the next post.
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