Automated Cash Application is something that’s been in progress for a while as we’ve all been waiting for an easier way to reconcile our bank statement. So the purpose of this feature really is to ensure that we are able to match any incoming payments or customer payments against the correct customers and the correct invoices without having to go away from the bank legislation page and creating the transaction separately. We are going to share a webinar with you today, that demonstrates how it works.

Automated Cash Application Overview

Let’s dig into the released, what it’s used for, what are some of the benefits of using it and what are some of the limitations of using it. There are some intelligent matching features with it that helps you set up some rules around matching against customers that may not perfectly match. There are some exception handling roles, say for example, if it couldn’t find a customer, if it couldn’t find an invoice number, couldn’t find a matching amount, what do you do in that case?

Following all of that, the webinar will go through:

  • a demonstration to show you how to import a bank statement,
  • how to use the automated cash application feature to create the payments against customer invoices,
  • how to set up the matching rules,
  • how to do the bank reconciliation process of matching bank data.

After matching bank data and clearing all the lines from the bank statement and reviewing those, we will finish on reconciling the account.

Effective cash management is critical for  every business to be successful, but having the money deposited in the account is only part of the process. These payments need to be matched to the appropriate invoices so that we can then clear them from the accounts receivable. When this is not done in a timely manner, it affects your cashflow statement and also your balance sheet. It can result in your statement showing higher receivables than you actually have.Automated cash application reduces the amount of time that you need to spend on the bank reconciliation, which means you can actually do it more regularly and therefore have a more up to date cash flow statement and more up to date balance sheet as well.

Using the Feature

The Automated Cash Application feature is available to all and was released in our last 2021.2 release. When you use this feature, it automatically matches imported bank payments with open invoices in NetSuite. Once it performs the match, you can then submit it to create GL payments, which are automatically created and applied to the invoice which means you can do it all in one screen. You don’t need to move away from the screen to go and find the invoice or find the customer and then create a payment from there.

It finds and updates customers on imported payments, and then auto-generates the GL customer payments with just one click. It does have some intelligent matching logic to identify the open invoices for imported customer payments. We can also set some additional customer mapping rules. Say, for example, your bank statement had a different name to what the customer was called in your account, you could set some rules around that to say, “Okay, next time you see this name in the bank statement, it belongs to customer A.”

You can also edit or update cash allocation on identified invoices. You can find additional invoices and also auto-apply invoices to the GL customer payments. Additionally you can auto-reconcile the customer GL payments against the imported customer payments. What that means is, once you have created the payment transactions, generally, what you would’ve had to do is go to the matchback data page and then match it against your bank statement line, and then go to your reconcile account statement page. What the automated cash application process does is attune in one step where it sends it straight to your reconciliation page, which means it disappears from your matchback data page. You don’t need to go through and match again, because it’s already done it for you.

Benefits of the Feature

Some of the main benefits of this feature is performing cash application on imported bank lines, irrespective of method of import. So if you are using auto automated bank feeds, which is available for some of the banks in New Zealand. Alternatively if you are still manually importing your bank statement, you can both use the cash application. You can use the automated matching rules to support matching on invoice IDs. So, sometimes if the customer is only paying one invoice, for example, you might have the invoice number in the memo line. You can actually, especially if you’re doing a manual bank statement import, you can actually input the invoice number within the Excel sheet itself. So then when you get to the automated cash application screen, it has already automatically matched against the invoice.

You can reduce time and cost of payment entry and invoice clearing. So like I was saying before, instead of having to do several different steps, to actually move away from your reconciliation page, looking for your customer or looking for the invoice and then create a payment against it, and then going back to your reconciliation page and matching that payment against the bank statement line and then finally reconciling it. So instead of doing all of that, all you have to do now is the automated cash application screen. It’s just the one screen. You create the payment, you match it automatically, and then you move on straight onto your reconciliation page.

It can eliminate data entry errors. For example, if you have a customer that might have two invoices, one from December, one from January for the same amount, it’s quite easy when you are entering a payment to accidentally pick or apply the payment against the wrong invoice. Because again, set some rules around exception handling and you can make sure that it always applies to the oldest first if it can’t find the invoice number. And also if there is an invoice number, it’ll find the invoice number and it’ll automatically match it. So it reduces that room for errors, which is better for your accounts, aging reports. So it can lower your days of sales outstanding because with this feature being quicker to reconcile, you can therefore reconcile more often. You can do it on a daily basis. If you need your cash flow statement to be more up to date, your balance sheet to be more up to date, and your accounts receivable report would look much better as well.

Limitations of the Feature

Currently, it is a fairly new feature. So it’s only been around for one release now. It is a work in progress and NetSuite will still be improving the feature for some time. For now cross-currency and cross-subsidiary invoice application to payments are not supported. So if you have customers that are multi-subsidiary customers and have invoices in different currencies, that is not supported by the automated cash application. Consideration of discounts and credit memos during invoice application to payments is not supported either. When you go to apply a payment to an invoice, it doesn’t show you the credit memos or any discounts that the customer might have. So if you do have a customer where you think you’ve received less money, then what is upstanding in their account? There is a possibility that there is credit memo on the account. In which case you still need to go to the customer account and apply that credit memo to the invoice.

Support of advanced use cases, such as handling consolidated payments or parent child entities. If you are using consolidated payments where you can create a payment at the parent customer level and apply all invoices, including for your child customers, automated cash application doesn’t support that feature. It only applies it directly to the customer ability to customise layout. The automated cash application page or screen is fairly user friendly and it’s quite intuitive and you will go through that in the demonstration. But unfortunately there is no ability to customise the layout of that page as of yet.

Only money and transactions can be processed to buy automated cash application. The types of imported bank lines that can be processed would be customer payments and deposits. Any outgoing payments will still need to be treated separately. If you have a supplier payment that you might have made, you will need to go and then create a bill payment against the bill or against this supplier, which will then show up in the matchbank data to be reconciled, that process remains the same. So this automated cash application only applies to money that is coming in.

How to get the most out of the Automated Cash Application Feature

There are some prerequisites and some setup that you do need to make to use the automated cash application successfully. All bank and credit card accounts are available for this feature by default. You can use it for every bank account that you reconcile in NetSuite. The types of important bank clients that can be processed, customer payments and deposits. Any users that need to use this feature must have the following minimum permissions:

  • You must have automated cash application full. (This is a new permission that came with the release. You will need to go and edit the role and add this permission.)
  • You must be able to create customer payments.
  • You must be able to edit invoices.

Automated cash application does include some intelligent matching features and just some logic around that. So when you open up the screen and it finds customer lines or invoice lines, normally it tends to look for the invoice number. If it finds an invoice number that basically prompts everything else, because there is an invoice number, it just there amount matches. Even if the customer name doesn’t match, it will match against that line. Now, when we say match, it still goes through a review process where you still need to review it. You still need to submit it to your bank rec. It doesn’t all happen automatically.

It will match against your invoices. If there are invoice numbers in your bank statement, in your imported bank statement. If there aren’t any invoice numbers, then it will go and look for customer name that matches the customer name in your bank statement. And if there isn’t, then it will show the customer name as blank. Which gives you the opportunity to go find the customer from this page directly, and then apply it against the invoices that will be listed in here.

Manually Importing Statements

We do recommend manual import to ensure optimal customer mapping. It’s a fairly new feature in New Zealand, and there have been some bugs around some of the bank statements that are coming through. And some of them information is getting a little bit missed. For example, one that we found in particular is the memo column is actually getting combined into one column when it actually comes through to your matchbank data page. So that actually creates some issue around matching, especially if you really need those particulars and also the code or the reference and also the memo field to perform good matching. Because of that current issue, we do recommend that bank statements are manually imported. And therefore you can customise that Excel spreadsheet to ensure that you have all the data that you need from the bank statement to make the pro the whole process easier for you really.

You can set customer mapping rules for automatic matching. For example, you may have customers that are called A as their trading name. But in your account, you might call them B. When the statement comes through with a payment from customer A, NetSuite’s not going to be a able to find customer B and match it against customer B. What would happen then is that you would find that customer B match against it, and then you will create a mapping role. So the next time, every time it receives a payment from customer A, it will automatically know to match it against customer B.

The generator payments are automatically submitted to the reconciled account statement page. So once you create the payments and you submit it from your automated cash application page, it goes straight to your reconciled account statement page. So you don’t have to do it all again and match it again to your bank statement line in the match bank data page.

 

For a comprehensive look at the automated cash application features, watch the webinar or read the FAQs.