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Is Artificial Intelligence Determining the Future of Cash Application?

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nils Strachanowski author image

Nils Strachanowski

23-04-2021 7 min read

Nils Strachanowski discusses how humans and AI can work together for best possible results in AR


In times of economic uncertainty cash collection and application is more important than ever. What are the main challenges organizations face in their cash application process and how are these challenges exacerbated by the current crisis?

The cash application process is defined by a certain set of challenges we see in basically every organization. Foremost we have manual and repetitive tasks that slow down the allocation process and the cash flow – this is a problem, especially in times of tightening liquidity, where you want to have you cash available as soon as possible. Delayed cash allocation is often a result of sluggish processes. Many organizations also suffer from a lack of visibility, which can be even more detrimental, when you are going through a crisis and need to know where your cash is. Furthermore, fragmented processes and limits of currently implemented solutions also hinder finance departments to tap into the full potential of their cash application process.

How can Serrala help organizations meet and overcome these challenges?

Well, manual and repetitive tasks can be easily addressed with intelligent automation. Our cash application solutions are able to achieve highest possible automation rates of nearly 100 % with some of our customers, reducing manual activities across the board. They bring down unallocated cash and update customer accounts first thing in the morning and help with the monitoring of important KPIs and gain full transparency of the process. Organizations also really benefit from a higher level of standardization with a solution capable of processing all incoming formats and facilitating intelligent technology including AI & ML to achieve best possible results.

How does the automated cash application process offered by Serrala look like?

Our approach to cognitive cash application consists of basically three areas: First we have what I would call neat end-to-end processing. All common formats from banks, such as statements and lockbox, from customers, including all types of remittance advices, and settlement files, and from payment service providers are automatically accepted. More than 50 pre-built reporting KPIs and KYC features ensure transparency and users can create their own matching rules, while integrated workflows to improve process quality. Second, we build on future-proof technology. We facilitate AI & ML features for matching and support the digital transformation via a hybrid cloud approach, combining on-premise advantages with cloud agility. By applying these technologies, our customers are able to achieve high automation rates and reduces manual and repetitive tasks by 85% on average. The result: Same day receivables matching and no more unapplied cash, less DSO and more efficient up- and downstream order to cash processes.

You mentioned AI & ML. These are also sometimes called “cognitive technology” due to their self-learning and self-acting capabilities. Can you give an example how cognitive cash application works practically and how organizations benefit from this technologies?

Our approach is to have humans and AI work together for best possible results. Our cash application solutions offers rules that are simple to set up – even for complex scenarios. You can leverage any information provided in bank statements, remittance advices, and settlement and lockbox files and adjust pre-configured rule templates within seconds. Transparent feedback loop help to further improve the rules. Then our AI Match feature provides AI based matching without any manually created rules. Customer payment behavior is analyzed and affects the scoring and decision making and machine learning is applied for customer names and bank details. Automatic learning is also used to improve the remittance advice recognition. And finally, cognitive technologies can easily detect exceptions and thereby speed up the exception handling for bank statement, lockbox and remittance items. Automated posting proposals accelerate the process of exception handling, including automated triggering of follow-up actions.

From your experience and the feedback you get from your clients, do you expect cognitive technologies to play an important role in the future of order to cash?

Definitely, we see it moving into that direction. And the remote working movement in recent months has once again emphasized the importance of a solid digital infrastructure. We at Serrala do our best to support our clients on their digital transformation journey. For instance, next to our new cloud solution for cash application, we recently added cloud-based solutions for automated request to pay and PSP reconciliation to our portfolio. They perfectly complement our cash application solutions, once again following our end-to-end approach in automation. We believe this is the future and our clients and overall market developments seem to agree.

 

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