We told you what are the key reasons for the existence of the “Cash Applications” process in the last post https://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.
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 https://faoblog.com/guest-post/. We will review your post and release it within 48 hours of your posting.
The Cash PROCESS system is required and I agree with what had mentioned by the author explicitely.
As most of the big companies use some ERP solutions the cash accounting has been made more simplified at the programming stage so that the system picks entries very comfortably. Inspite of this we do face problems at times due to insufficinet details being given in the input documents.The application process is very important and needs scrutiny as well. Any computer aided system is basially on the priciples of “Garbage in Garbage out”