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 document can be used as a general guide to understand and review the AR and cash application process. Organizations should continuously update and monitor the processes included in this document to ensure that they accurately reflect business operations. This process flow focuses on the AR and cash application process and outlines steps such as:
- Setting up new customer accounts
- Receiving customer payments
- Entering payments
- Reconciling bank accounts
- Researching payment discrepancies