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
- Generating aging analysis periodically
- Publishing details of unresolved items, especially old ones
- 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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