Founder member of FECMA

Advancing the credit profession

Unlocking Your Hidden Millions – guest blog by CICM Corporate Partner Rimilia

21 March 2019

Cash is King – we all know that, so why do so many organisations still have piles of unallocated cash and multi day internal processing arrangements?

Cash Allocation Teams Struggle

Cash teams are struggling with time-consuming and complex tasks that keep them from doing their most important role – making sure all cash is allocated quickly, correctly and available for the company to use.

One of the greatest challenges cash allocation teams face is month-end. There are a lot of associated tasks with closing out the month, many of which continue to be manual and require a lot of resources. Investigating unallocated cash is one of them, especially when there are large volumes and complex remittances, which add to this challenge. When teams are burdened, efficiency slows and the greater the propensity is for inaccurate or incomplete allocation.

With slow, manual processes, you risk delaying closing month-end and growing your unallocated cash.

Do Automation and Artificial Intelligence Bring Efficiency ?

The struggle is real, but the quest to allocate cash quickly can be, a surmountable problem.

The repetitive, yet often complex processes of cash allocation make it an ideal candidate for the latest advances in artificial intelligence. Intelligent A/R automation software can take cash allocation tasks and automate them, even without remittances, while also learning and improving match rates as new data comes in.

Unallocated cash, which can run into the millions, can be unlocked through intelligent invoice matching that allows complex and difficult payments to be matched in seconds, meaning your business can bring that money out of hiding and put it to use.

However, due to the rapid advance of technology in this area, it is of course,  important to carefully select the right cash allocation automation  for your organisation – in order to have the best impact on your unallocated cash. According to The Hackett Group benchmarks, software match rates to invoice level are classified into the following grades:

  • Around 50% is classed as “Basic”
  • 66% or more is considered “World Class”
  • 85% plus is “Exceptional”

Although even basic levels of matching will provide a benefit, it’s really the ‘exceptional’ solutions built on AI that have the best impact on unallocated cash.

Using AI-powered software rated as “Exceptional”, we’ve seen companies go from several millions of pounds in unallocated cash down to under £1000 in just 10 months.

The Hackett Group reports in their 2018 Customer to cash Intelligent Automation Poll that only 35% of companies are currently taking advantage of full cash allocation automation, and even many of those may not be using the latest technology to maximise their process. That’s a lot of cash left unallocated.

In the same study,  90% were in some stage of consideration of, or planning for, automation. This shows that the market is waking up to the technology available, but for many, it’s still in the consideration stage.

It’s clear that now is the time to adopt. The technology is mature, with a foundation of pioneers that have been using automation for considerable time. There are a number of organisations using a variety of solutions, so plenty of reference sites to check out.  However, a large part of the market is just beginning to wake up. What are you waiting for?



comments powered by Disqus