All 23 Cash Application questions
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What is remittance advice from the customer's side and why is it important for cash application? What is the difference between a payment and a receipt in AR? What does it mean to post a receipt 'on account'? What happens to the AR balance when a receipt is applied? How do you handle a short payment or overpayment during cash application? What are customer deductions (chargebacks) and how are they managed? What is a lockbox and how does it help cash application? How are returned/NSF customer payments handled after they were applied? How is customer credit balance or prepayment handled in AR? How are bank fees and card-processing fees on receipts accounted for?
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Accounts Payable & Receivable › Cash Application

How does automated cash application (auto-matching) work?

Intermediate

Answer

Auto-matching uses remittance data and rules/AI to match receipts to open invoices by amount, invoice number, customer, and reference. Clean payments with remittance post automatically (straight-through), while exceptions route to analysts. It raises the auto-match rate, speeds posting, and cuts manual effort and unapplied cash.
Real-world example With remittance capture and matching rules, the team's auto-application rate reaches 85%, leaving only exceptions for humans.

Common follow-ups: What data drives auto-matching? | What lowers the auto-match rate?

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All 23 Cash Application questions