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Financial Impact of Improving On Account Cash Application

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  • #54689

    John
    Participant

    Hi

    I work in a process which takes care of the Cash Application process in the entire O2C chain for a client . I am looking to drive a project to reduce the Amount of On Account / Unapplied Cash between the 30-60-90 buckets. However, i am struggling with the business impact of doing such a project . Besides, the normal impact of reducing number of collections call ( Which currently is done by another vendor and thereby no real influence on us) , is there any financial impact of reducing On Account / Unapplied cash , since the money has already been received by the client , but just hasn’t been applied to the transaction.
    Is there any quantification of financial impact that can be done?

    Rgds,

    0
    #196719

    Jalil
    Participant

    Hi John,

    Obviously, you have a direction to reduce your unapplied cash. It’s good to understand what is the benefit having good cash application process. Probably you won’t see a direct impact in financial term if you look in this specific area because cash application is part of credit processes in a whole and somehow dependent to other processes ie debt collection, credit assessment, billing.

    I’m assuming your company is doing manual application process & to start kick of the project you can identified cost saving in term of time that you can save by doing auto-application (time=$$$). How many people you can free up by having this process in place.

    while doing the analysis you will somehow detect inaccuracy of the billing and so on, this also can quantified as part of your financial impact.

    Hope this helps!

    Cheers
    JJ

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