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

https://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.

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