What is Cash Allocation?

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Sanne de Vries
Written by Sanne de Vries LinkedIn profile
Sanne de Vries is responsible for the marketing at Payt. From strategic reputation management to social media marketing: nothing is off limits for her. She is ambitious and enjoys tackling new challenges with a growth mindset.

Cash allocation is the process of matching incoming payments with outstanding invoices. It is important for every company to have insight into its financial situation and to have the cash flow in order. One way of doing this is by optimising the cash allocation process with software. Automating your debtor management provides an important contribution to a healthy cash flow and optimal business operations.

Cash allocation process

The cash allocation process is usually time-consuming, as incoming payments need to be matched with unpaid invoices. Especially in large companies with a large number of incoming and outgoing invoices, it is important to streamline the cash allocation process. 

This seems an easy job, but how often does it happen that information is missing or the amount cannot be found? For example, because the debtor has reversed the figures on the transfer. Or multiple payments are received for the settlement of one invoice. It also happens that money comes in from customers for which it is not even clear what it is intended. 

It takes an enormous amount of time to correctly match payments in these situations. In the first place, you spend time on research and it might be necessary to contact the payer. This time is of course better spent on other things that benefit the company. There is therefore a solution for optimising the cash allocation process, namely with a cash allocation function. 

Cash allocation software

Payt’s debtor management software makes an important contribution to the optimization of the cash allocation process and strengthens the cash flow position. Debtor management software provides direct insight into the unpaid accounts at any time. It is also clear exactly where the money is. Cash allocation has never been so easy.

Always insight into the financial situation

Matching incoming payments to unpaid invoices is, of course, very important for maintaining an overview and insight into the financial situation. Using automated software for the cash allocation process saves employees a lot of time. The time saved can then be used productively to carry out other tasks. 

Cash allocation is important to match payments, but what happens when debtors do not pay? It takes time to go through all the unpaid invoices, call debtors or send a reminder. Debtor management software offers a perfect solution to support the cash allocation process.

For whom?

Cash allocation software is meant for companies that want to make the matching process of incoming payments and unpaid invoices fast and efficient. For example, in the situation that the number of payments to be matched is enormous. Or if there is a constant factor in the sense of many amounts that cannot be allocated. Thus, cash allocation software also provides a solution when there is a lack of IT support.

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