Cash is at the heart of every business. It’s typically the largest asset on the balance sheet, and it’s critical for buying raw materials, building and operating facilities, manufacturing and shipping finished products, marketing and selling goods and services, and paying employees.
With the entire business depending on cash, it’s imperative to keep cash flowing. That’s why more CFOs are taking a hard look at the way their business collects and applies its cash. Automating cash application is a missed opportunity for many CFOs and their businesses
Managing Cash Is Harder in Difficult Times
Seventy-nine percent of businesses surveyed by IOFM said their Day’s Sales Outstanding (DSO)—a measure of the average amount of time it takes a business to collect its receivables—has grown since the start of the COVID-19 pandemic.
One-quarter of these businesses reported that their DSO is more than 10 days higher than before the pandemic started. For many businesses, that’s millions of dollars that are trapped in the receivables lifecycle and can’t be invested in the business.
The cash crunch created by COVID-19 is magnifying inefficiencies in cash application, making it more critical than ever to streamline the cash application process with intelligent automation.
A Better Way to Match Payments & Apply Cash
Veolia is experiencing these benefits firsthand.
Like many organizations, the UK leader in environmental solutions used to have lots of unapplied cash. As a result, receivables staff manually handled payments multiple times, credit controllers wasted lots of time chasing payments, and customers complained of slow cash application.
Veolia knew there had to be a better way to match payments and apply cash. That’s why it deployed an intelligent cash application solution from BlackLine, which uses automatic matching algorithms to accurately process receipts with minimal human intervention.
Automating the cash application process has provided three big benefits for Veolia.
Improved Efficiency by 70%
Deploying an intelligent cash application solution eliminated many of the manual tasks associated with matching payments and applying cash. Bank reconciliation is now completed daily within minutes.
As a result, Veolia eliminated its backlog of customer payments waiting to be applied at the end of each month and accounts receivable staff have more time to focus on higher-value tasks.
Reduced the Cost to Match Payments by 75%
With automation, most of Veolia’s payments are matched automatically. And 99% of the company’s payments are applied against invoices on the day they are received, with minimal human effort.
Unapplied cash now represents just 0.002% of the company’s ledger balance.
Better Organizational Effectiveness
The ability to track customer payment behavior has helped Veolia’s team improve its cash collections and increase working capital. Veolia achieved payback on the Blackline solution four months after implementation.
Become a Driving Force for Growth
Cash flow means more during difficult times, and it’s disrupted by weak customer demand. Cash-flow insolvency is a real threat for some businesses, particularly small and mid-sized businesses that don’t have large lines of credit.
Digitizing and simplifying cash application with intelligent automation enables businesses to improve their cash position by reducing unapplied cash, improving decision-making, enhancing the customer experience, and decreasing overhead.
With an intelligent cash application solution, businesses can address the short-term cash crunch created by the COVID-19 pandemic while positioning the business for long-term growth during the impending recovery.
Read this white paper to learn more about the importance of cash application during difficult times, and how intelligent automation digitizes and simplifies cash application.