Last post we started with a recap on the processes in accounts receivable (AR) / order to cash (O2C)

http://faoblog.com/processes-ar-list-recap/

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”

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.

We have enabled a button on the top of the first page, which will enable you share your posts. If you wish to write about any of the current streams, you can do it at http://faoblog.com/guest-post/. We will review your post and release it within 48 hours of your posting.