We told you what are the key reasons for the existence of the “Cash Applications” process in the last post http://faoblog.com/processes-ar-cash-applications2/

I think this post also gives you an idea as to what are the key components of a cash applications processing scenario.

Now to bullet these components:

  • Recording of receipts –
    • Extracting any bank statements
    • Passing entries for the amounts received to credit a generalized account for receipts
    • Separating the entries for inter-company / unit transfers from those received from customers
    • Passing entries for cash deposits
    • Passing cash / cheque / credit card receipts – especially for large retailers, which do not need specific cash applications, being for walk in / non-credit customers.
  • Detailing of receipts –
    • Extracting any specific information of the remitter from the bank site
    • Collating details of checks / cheques received
    • Confirming clearance of these checks / cheques
    • Demarking intercompany transfers and recording the reasons and sources of remittance
  • Cash Applications –
    • Applying specific receipts to specific customers / bills raised
    • Isolating transactions unidentified
    • Generating daily details of unapplied amounts and the reason thereof
  • MIS
    • Generating aging analysis periodically
    • Publishing details of unresolved items, especially old ones
  • Resolution
    • Preliminary identification, based on amount / remitter
    • Reaching out to customers for clarification for identification of specific amounts
    • Creating reconciliations of remittances and bills raised

Well, there is more to this, and will depend on your client’s organizational setup.

 

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