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Digital O2C: Conquering Complexity in Cash Application

Digital O2C: Conquering Complexity in Cash Application

3 Min Reads

Emagia Staff

Cash application is a critical and complex operation buried in the order-to-cash (O2C) process. When it goes well, no one notices beyond those responsible for it. But when it does not go well, serious problems can surface.

The cash application team often resembles a duck: calm on the surface, paddling furiously underneath. But if the duck’s feet encounter obstacles, its apparent serenity vanishes.

For global companies, cash application is often far from serene. The usual challenges include remittance information coming from a host of sources in various formats, which keep cash-application teams very busy. For global enterprises, add payments in different currencies and remittances in multiple languages, then multiply the number of banks involved, and the difficulty of managing cash application increases considerably.

However, a few global companies manage the complications and see substantial productivity gains, better customer experience, and cost savings. They achieve this through cash application systems, part of O2C hyper-automation platforms, that leverage artificial intelligence and analytics. And the significant point is that they are doing this now.

Cash Application Complexity Compounded

The work of cash application involves the immense tasks of data gathering, extraction and input. Data sources and formats include:

  • Paper, Excel or PDF files and statements from customers and lockboxes
  • EDI or BAI2 transmissions
  • Customer vendor portals
  • Your own EIPP portal
  • New digital payment modes

An effective automation system must correctly identify and extract specific data from all those sources and formats and input it into a formatted cash application file. Further, in an international setting, it must receive data from numerous banks under varying regulations, including the EU’s new PSD2, and read multiple languages and currencies.

Digital Assistance through AI

State-of-the-art AR/O2C digital platforms such as that by Emagia employ artificial intelligence (AI) to overcome the past limitations. Emagia’s complete AR/O2C automation platform combines automation, AI and analytics to bring a comprehensive approach to automation of the order-to-cash process.

In the specific arena of cash application, AI underpins Emagia’s cognitive remittance data capture in GiaDocs, which handles data extraction and conversion. First, GiaDocs reads data from remittance advice of all sorts, structured and unstructured. Then, it extracts the relevant data and inputs it into a structured file for the auto-cash engine. Thanks to machine learning, it learns as it goes, continually increasing accuracy.

Emagia’s auto-cash engine and analytics operate on an enterprise-wide data set that combines data from multiple systems and sources. The consequence is cash application across the enterprise with unified reporting. The auto-match engine also learns as it goes, and overtime is achieving cash application auto-match rates of up to 90 percent. In the process, it automatically creates deductions on short pays.

Analytics Capabilities for Cash Application

Analytics enhance the capabilities of the various components in the AR/O2C platform. In cash application, dashboards enable monitoring of the cash application process, including inputs, outputs and backlog. How many unapplied payments are there? How old are they? Are they increasing or decreasing? Users can design the dashboards according to their needs to get the indicators and attributes of their process.

Analytics also supports root-cause analysis. For example, where is the unapplied cash coming from? What is lacking in customer X’s remittances? Analytics enables the team to compile data and gain insights to approach customers and work out solutions.

Predictive analytics support forecasting. By combining historical data with sales projections, users can forecast more accurately.

Cognitive Data Capture Beats Complexity

Cognitive data capture with an intelligent auto-cash engine, part of a comprehensive AR/O2C digital platform, offers enterprises a real opportunity to improve cash application. It works in multiple languages and can manage varying currencies while bringing unified reporting, so it is well-suited for global enterprises. As a result, organizations can realize enormous time savings as painstaking human work is automated.

Digital assistants like GiaDocs process and apply payments faster and more accurately. As a result, companies can eliminate bank fees, and fewer FTEs are required. In addition, AR management has access to current reporting to enable troubleshooting and process improvement, while predictive analytics guide decisions. Finally, and critically, customers have a better experience. This technology is at work today.


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