It cuts the cost of cash allocation by as much as 70 per cent, increases financial control, and enables businesses to reap the full benefits from the UK banks' Faster Payments Service (FPS).

The new cash allocation software is part of a modular suite of solutions¹ from Macro 4 that increases efficiency in different stages of the order to cash process. It also reduces the risk of credit controllers chasing customers who have already paid their invoices, according to Lynda Kershaw, marketing manager for the software and services company.

Kershaw described the current situation in which accounts departments are devoting excessive time and effort to manually matching customer payments with the correct invoices:
"Cash allocation usually involves lots of laborious checking of paper documents - especially when single payments cover numerous invoices. The pressure really mounts at month end, when delays can result in money left unallocated, impacting key financial indicators such as aged debt. Often staff are reassigned from other activities just to try to get the allocation task completed. Until all payments are allocated it is unclear which invoices are still outstanding, so credit controllers waste their own time and their customers' by chasing people who've already paid."

"Absurdly, even though Faster Payments arrive in accounts within hours, most businesses still don't get the full benefit because they can't be allocated without the remittance notes, which are usually delivered by post several days later. In fact the FPS can actually make matters worse because you have more unallocated payments sitting on your books, waiting for remittance advices to arrive."

The cash allocation module extracts relevant information from electronic payment notifications, as well as cheques, and automatically matches payments with one or many invoices and credit notes. For the majority of payments, including Faster Payments and other elelectronic transfers, there is usually no need to wait for postal remittance advices before starting the allocation process.

"Typically between 85 per cent and 95 per cent of payments are matched immediately," said Kershaw. "Also, because the system actually 'learns' once a match has been made, the number of exceptions declines very quickly. There is little or no manual effort required, allowing you to cut costs by as much as 70 per cent as fewer people are required for the cash allocation task. As the ledger is now 'clean' you can also see accurately which customers have paid and make sure you only chase the overdue accounts," added Kershaw.

Macro 4 is one of the few companies to offer an integrated suite of software that streamlines document management and eases the switch from paper to electronic delivery in the four key stages of the order to cash process ¹; integrated modules are available for sales order processing, credit management, eInvoicing and cash allocation.

"Our modular approach allows customers to get started quickly and expand over time. One of our customers - a global express delivery company - is now using our eInvoicing module to deliver 7.5 million of its annual invoices electronically. The switch from paper to online invoicing saves them around €3m annually in printing and postage costs. It also improves service for customers, who can now upload invoice data directly into their own finance systems," said Kershaw.

The credit management module gives credit controllers and customers instant online access to sales invoices, orders, Proof of Delivery (POD) and related documents to reduce queries and payment delays due to lost documents.

"A food distribution company uses our software to give its customers and credit controllers secure, online access to signed PODs to reduce customer queries over what's been delivered, get invoices paid faster and improve cash flow," explained Kershaw.

The sales order processing module ensures customer orders are processed correctly and on time. It eliminates manual re-keying of order information and also distributes important documents such as warehouse pick lists to the correct warehouse location to drive quicker delivery and fulfillment.