Cash application is a process relating to accounts receivable (AR), where incoming payments are applied to the corresponding customer invoice. Whether it is a cash or wire (EFT) payment, a monthly bank reconciliation is performed by the accounts payable (AP) assistant and the AR assistant within two days of month-end. It is then reviewed, signed off and filed by the financial controller.
This process flow focuses on the AR and cash application process and outlines steps such as:
This document should be used as a general guide to understand and review this business process. Organizations should customize this tool to ensure that it reflects their business operations and continuously monitor the process to ensure that the steps described are accurate.
- Setting up new customer accounts
- Receiving customer payments
- Entering payments
- Reconciling bank accounts
- Researching payment discrepancies