Efficient and strategic financial management is crucial for the growth of any organization. One of the key components of financial management is maintaining an accurate and up-to-date general ledger. 

Traditionally, general ledger accounting involved manual entry, extensive paperwork, and the risk of human error. However, with the advent of modern technology, financial management software has revolutionized how businesses handle their general ledger accounting. Let's explore how financial management software can streamline and enhance your general ledger accounting processes.

 

Understanding General Ledger Accounting

General ledger accounting is a fundamental component of a company's overall accounting system. It is the central repository for recording and organizing financial transactions and maintaining the company's financial records. It offers a comprehensive and systematic overview of an organization's financial activities, enabling accurate and reliable financial reporting.

At its core, the general ledger is a master record that contains all the individual accounts used to classify and summarize financial transactions. These accounts include assets, liabilities, equity, revenue, and expenses – with so much information to process, something can easily go wrong if maintained manually! 

Still Using Traditional Manual Accounting Processes? 

Manual general ledger accounting poses risks related to human error, time inefficiency, data accuracy, auditability, scalability, and compliance. Adopting financial management software and smart solutions can mitigate these risks, improve accuracy, streamline processes, and enhance overall financial management capabilities. Here are some of the pitfalls of manual general ledger accounting:

> Difficulty in Tracking and Retrieving Information: Without automated systems, retrieving specific transaction details or generating reports may become time-consuming and challenging. Locating and verifying information within extensive manual records can be cumbersome and prone to errors.

> Lack of Audit Trail: Manual general ledger accounting may lack a reliable audit trail, making it difficult to trace and verify the accuracy of transactions and adjustments. An audit trail is crucial for internal control, compliance, and identifying potential fraud or errors.

> Inefficient Reconciliation: Reconciling accounts manually can be a complex and time-consuming process. It involves comparing multiple documents and ensuring that all transactions are accurately reflected in the general ledger. Manual reconciliation increases the risk of overlooking discrepancies or making mistakes during the process.

> Limited Scalability: As the volume of transactions and the complexity of the business grow, manual general ledger accounting becomes increasingly challenging to manage effectively. It may lead to inefficiencies, errors, and difficulties in handling the increased workload.

> Security Risks: Manual records are susceptible to physical damage, loss, or unauthorized access. Protecting sensitive financial information and maintaining data confidentiality becomes more challenging without the security measures provided by financial management software.

 

Smart Financial Management Software Improves Accuracy, Efficiency and Security

Introducing smart financial management software can greatly benefit your general ledger account, here’s how:

Automating Data Entry:

Financial management software eliminates the need for manual data entry, reducing the likelihood of errors and saving valuable time. It can directly integrate with various systems and capture financial data automatically, such as transactions from sales, purchases, payroll, and bank accounts. By automating data entry, the software ensures accuracy and allows your accounting team to focus on more strategic tasks.

Real-Time Updates and Accuracy:

With financial management software, your general ledger is always up-to-date. As transactions occur, the software records them in real time, eliminating the need for manual journal entries and reducing the risk of overlooking or duplicating entries. This real-time updating ensures accurate financial reporting and provides management with timely insights into the company's financial health.

Streamlined Reconciliation:

Reconciling accounts can be a time-consuming and error-prone process. However, financial management software simplifies this task by automating the reconciliation process. The software can match transactions, identify discrepancies, and provide alerts for any inconsistencies, ensuring that your general ledger remains accurate and balanced.

Improved Financial Reporting:

Financial management software offers robust reporting capabilities, allowing you to generate customized financial reports effortlessly. These reports provide valuable insights into your organization's financial performance, including profit and loss statements, balance sheets, and cash flow statements. The software's reporting features enable you to analyze data, identify trends, and make informed decisions based on accurate and up-to-date financial information.

Enhanced Security and Compliance:

Financial management software maintains security and protects your sensitive information from unauthorized access. Additionally, the software often incorporates compliance features that help ensure adherence to regulatory requirements and accounting standards, reducing the risk of non-compliance penalties.

Scalability and Integration:

As your business grows, so does the complexity of your general ledger accounting. Financial management software provides scalability to accommodate your expanding needs. Whether you have a small startup or a large corporation, the software can handle the increasing volume of transactions and adapt to your changing requirements. 

Furthermore, many financial management software solutions integrate with other business systems such as customer relationship management (CRM) software and enterprise resource planning (ERP) systems, enabling seamless data flow and enhanced efficiency across departments.

Financial management software has become a game-changer for general ledger accounting. By automating data entry, ensuring real-time updates, streamlining reconciliation, improving financial reporting, and enhancing security and compliance, this software empowers businesses to optimize their financial management processes. 

Want to learn more? View our robust FAO services or get in touch with us and our team can answer your questions and guide you with the right solutions. 

With today's economic uncertainties, business leaders are looking for ways to increase savings, reduce costs, and optimize processes to prepare for any potential issues that lay ahead. One particular area of interest is automating finance and accounting operations, including cash application and integrated receivables. Cash application refers to the process of matching a customer's payment to the invoice that's being paid in the vendor's accounts receivable ledger. 

While many companies have already begun the automation process of these particular functions, some are still slow to upgrade. We do, however, see an uptick in financial automation. According to Globe Newswire, accounts receivable automation is expected to grow at a compound annual growth rate of 14.2%, from $3.3 billion in 2022 to $6.5 billion by 2027.

Making cash application and integrated receivables a major part of your digital transformation strategy can save your business a lot of money. It can reduce manual labor and accelerate cash flow by decreasing the time it takes for the cash to enter your accounts. Cash application has a significant impact on business due to its contributions to the steady flow of cash. If payments are stuck at posting in the cash application process, companies won’t have access to the cash they need. Failing to manage cash application and inadequate control of cash flow can create major issues for the business.

Current Challenges of Cash Application 

Even with the existing digital solutions for cash application today, many businesses still face challenges in their cash application process including: 

Slower Processes

If a company relies on mostly manual work and light automation, the cash application process will run significantly slower, delaying the time it takes for companies to receive cash. Cash application requires accuracy and speed but manual processing comes with human error and slower turnaround times. This can be a significant problem when your business requires liquidity so that your cash is available when you need it.

Lack of Visibility

Less robust software, or having no software at all, means that there's a lack of visibility into where the cash is. During any time of economic uncertainty or crisis, it's imperative to know what is going on with your cash, to find ways to better improve cash flow, and to see where any issues may lie in delayed deposits. 

Customers Want More

As technology continues to develop, customers expect businesses to implement technology in order to provide them with a good experience. In today's world, customers want a variety of options to pay from paper checks to ACH to wire transfers to debit or credit cards or even a digital wallet. Offering multiple ways to pay provides an excellent customer experience. Not all systems can accept multiple payments, however, which could create friction in the customer relationship.

Complexity

Cash application seems like a fairly easy process when defined.However, in practice, it gets significantly more complicated. For example, a single invoice may be sent for multiple orders, which can create confusion when comparing the invoice to the orders and ensuring that they match. These types of complexities often create more work for the accounts receivables team and, without an advanced automated system in place, it can be a significantly time-consuming task.

Automating the Cash Application Process

As we've already established, the quicker the cash application process, the sooner the company has cash available to spend on essential expenses. By automating cash application, invoice processing, payment and remittance matching, and other formerly manual tasks become streamlined, accurate, and quick. 

The digital solution a company has in place defines the features and technology that they'll be able to use. Different kinds of software have different features, so it’s important to keep certain ideas in mind when looking for a cash application automation software.

Improved Cash Flow

This is the bottom line for the cash application process and therefore any software being considered needs to show how it improves cash flow. Without improving cash flow, the solution or software isn't doing its job.

A cash application solution that can match the remittance data with related electronic payments can post that data and the payment simultaneously, resulting in receiving the payments sooner. This will significantly reduce Days Sales Outstanding (DSO) and improve cash flow.

Reducing and Managing Exceptions

This is another complexity of the cash application process. The remittance data that accompanies electronic payments can be inconsistent or incomplete. Also, the payments may arrive separately from the related remittance information, creating a challenge when it comes to reconciling payments. With a manual system in place, reconciling payments is time-consuming and lacks visibility around the incoming payments. This can not only affect cash flow but can also affect customer relations. 

With automation, you want to be able to reduce the volume of payments that typically would require extra attention prior to posting. Whether the customer sends a paper payment or an electronic payment, the system should be able to capture all important information seamlessly to accelerate posting.

Improve Employee Satisfaction

Automation reduces tedious time-consuming, repetitive, manual tasks and allows employees to focus on more strategic tasks. Repetitive tasks can be irritating and even hinder work performance, making the job less appealing. In a 2022 survey, employees claimed they wasted four and a half hours every week on tasks that could be automated; more than 68% of the employees wanted to take on new responsibilities but felt unable to do so due to the repetitive activities they were currently working on. Through automation, employees will have the ability to take on more responsibilities and expand their skill set.

Smart Invoice Matching

Smart rules-based and learning system -based invoice matching is a major consideration because it will significantly decrease the time to complete cash application processes. Some software platforms do not offer this particular feature, but it can make a huge difference in the account receivables process. With the right solution, invoices will be matched using standard, advanced, configured and learned rules, which reduces or even eliminates manual tasks in this operation. Invoices are scanned and converted to digital assets then matched and checked against algorithms and rules while the system learns every day on the matching patterns allowing users to create rules. If everything checks out, the payment is processed without any manual effort. This means that validating and matching invoices becomes streamlined, quick, and error-free.

Maximizing the Integrated Receivables Process 

The robust software platform that incorporates all of the points discussed above is Exela’s Integrated Receivables platform. Our platform goes beyond cash application and helps you coordinate every stage of your receivables system from AR reconciliation to analytics. Additionally, robotic process automation greatly reduces your workforce demands, processing times, and DSO by unifying your inbound channels and streamlining your cash application process.

Creating a robust system to meet customers' needs, Exela's platform provides cash application, file consolidation, data enrichment, and smart invoice matching. Our customizable solution presents an easy-to-manage, modular approach to billing and payments management that results in lower implementation costs, and reduced time to market. Exela’s Integrated Receivables platform enables add-ons and system adjustments as needed to optimize treasury operations.

Intelligent robotic process automation systems use optical character recognition engines to accurately capture data from varied structured and unstructured sources. The data is then digitized, A/R matched, and ingested into your ERP system. This eliminates the need for manual keying and improves process efficiency and accuracy. Because the system is able to accept a multitude of payments with ease, customers have the freedom of selecting their payment type.

Exela’s platform also enhances visibility and provides real-time activity monitoring so you can know where your cash is. Through reporting tools that integrate with the dashboard, you can further see into the receivables process. 

Smart Algorithm and Rule Base Invoice Matching Changes Cash Application

Not all automation is created equal and with a robust platform, companies can see better results. While many digital solutions exist for cash application and accounts receivables, finding the right one with the right features can be tricky. With a solution that offers smart invoice matching such as Exela’s Integrated Receivables platform, you’ll see a significant reduction in DSO, manual processing, and errors. It’s time to experience an optimized financial operation with Exela’s Integrated Receivables solution. 

Payment processing is a critical operation for businesses wherein leaders have visibility into deposit transactions, can mitigate possible fraudulent transactions, and can view any bottlenecks or issues that may be occurring. This can be a tedious task requiring significant manual labor. 

Finance teams may need to go into the company system to view transactions, look for trends, search through historical transactions, and determine issues. However, automation has helped to replace this process, providing an easier way for customers to pay while enhancing visibility and reducing manual tasks for financial teams. Transaction management software enables businesses to have a seamless process from start to finish.

Streamlining Transaction Management and Payment Processing

With transaction management, leaders need to ensure that their financial transactions and any operations related to those transactions are functioning appropriately. Transaction management software helps organizations manage all of their transactions. Some software may only be able to handle digital transactions while others can handle a variety of transactions, whether digital or paper. Helping with the creation, execution, and storage of transactions and related documents, transaction management software keeps everything compliant and secure.  

Financial transactions are an important part of the relationship between vendor and customer. It benefits both the customer and the business to have a fully functioning and streamlined transaction. With transaction management software that is finicky, slower, or creates issues, the customer experience can be affected and businesses could fall behind their competitors.

By using the platform, rather than relying solely on manual processes, you're relying on automated technology processes to perform functions quickly, efficiently, and accurately, making the entire process optimized and improved.

Take banks, for example. By using Exela's transaction management software, banks can offer their customers a variety of ways to pay their bills. Customers can select how they pay their bill, whether through ACH, check, credit card, debit card, etc. Once the payment is made, that transaction is completely visible to the bank, providing a complete auditable trail. Using software and automating transaction management results in cost reduction and increases efficiency and accuracy.

Exela's Transaction management software can also be used for exception processing and managing rejections and reconciliation. For example, a transportation company may use physical invoices that need to be scanned into the system. Since paper invoices and bills require a manual capture process, some of the transactions are missing pertinent information. While document types and fields are automatically populated, the software can flag any transaction that may be missing details, allowing users to easily access their transaction information through a secure web portal and add the missing information or reach out to the customer to obtain the information. 

Improving Payments with Transaction Management Software

Using transaction management software, businesses can see a serious improvement in their customer relationships, cash flow, and more. Here are some of the benefits transaction management software can offer.

Optimizing the Transaction Process

Automating the transaction management workflow creates a chain of custody for each transaction while freeing up resources. Rather than spending time on manual tasks, financial teams can instead focus on other key operations. Not only that, manual tasks are prone to errors while automation is more accurate. 

Auditing Transactions

This is another task that was once manual and significantly time-consuming. However,  automation software can quickly audit each transaction from start to finish. You can look at your historical transactions or recent transactions or search for the transaction of a particular customer.

Enhanced Customer Experience

Transactions are a major component of a customer experience. If customers find that transacting is difficult, complicated, or requires extra steps from them, they're more likely to report that as a negative experience. Whereas if a company provides a smooth and seamless transaction platform that allows customers to pay quickly, using the payment method they want, with as few steps as possible, this provides a great customer experience.

Increased Savings

Transaction management software increases savings in multiple ways. First of all, with software in place, a lot of the transaction process is automated, which reduces the amount of work employees perform. Transactions are streamlined, visibility is improved, and some software can provide reports to gather key insights into the transaction process. All of this can be done in a fraction of the time it would take a single employee to do the task.

Another way it may save money is by encouraging customers to use online payments rather than sending in paper payments. With the cost of paper rising, the decrease in paper usage can turn into significant cost savings for companies.

Enhance Payment Processing with an Exela-Hosted Software and Mobile Solution

While some businesses may choose to outsource their payment processing, transaction software enables companies to keep their operations in-house. However, depending on the software, this can also present a challenge as some software is unable to integrate into existing legacy systems. The software also often requires on-premise hosting, creating another layer of implementation and maintenance to consider. 

The good news? We have the solution. Exela’s Transaction Management System (TMS) is advanced software that supports payment processing with cloud resiliency while simplifying and streamlining payment operations. Not only does TMS perform remittance processing and electronic clearing, but it also captures and processes full-page documents while providing a variety of data entry tools. 

TMS integrates into your backend systems easily and its modular architecture allows for scalability and reliability while excelling at processing high-volume payments. Bank-agnostic and hardware-agnostic, TMS fits into customers’ needs without restriction. 

Exela hosts TMS in its Azure cloud, enabling companies to access the software and maintain their operations in-house. With its online portal, teams can view and resolve transactions easily. The platform offers an end-to-end workflow, from capturing and accepting payments to providing dashboard reports. The system processes print and digital deposits as a single workflow and processes payments with supporting documents such as invoices, structured or unstructured forms, tax forms, etc.. TMS prevents duplicate payments with real-time duplicate check detection and correction. 

With its remote mobile capture, customers can easily transact using the payment method and transaction method they prefer from across the street, or from around the globe. Supporting both Android and IOS interfaces, TMS offers a mobile solution that captures checks, and coupons securely. Offering an easier way for customers to pay creates a smoother payment experience and process. 

Take the Next Step for Optimized Transaction Management

Given the importance of your payment operations, it’s time for leaders to improve the transaction management process using software that’s flexible, advanced, and efficient. Learn more about Exela’s TMS platform and what it can offer you!

Payments are a fundamental part of business – from the local mom-and-pop shop all the way up to global enterprises. So, technology changes occurring in the payments industry tend to have a big impact. And make no mistake, changes are coming. Check out the latest edition of PluggedIN: The Future of Payments for a look at some of the biggest trends in payments technology, including:

• The Past, Present, and Future of Payments
• Request to Pay: Payment Meets Communication
• The Rise of Real-Time Payments
• Integrating and Automating: From Procurement to Payment

PluggedIN is Exela's thought leadership publication, providing fresh insights from the cutting edge every quarter. Subscribe to get plugged in.
 

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It’s clear that the COVID-19 pandemic will likely have a lasting impact on many things, from the way we travel to the popularity of remote work arrangements and contactless delivery options. Add to that list the way individuals and small businesses make and request payments. As this new white paper from Finextra and Exela discusses, the economic crisis brought about by the pandemic will create a situation where both payers and payees will benefit from Request-to-Pay (RtP), a more agile solution to settling invoices and debts.

Request-to-Pay removes some of the friction related to sending and receiving payments and increases liquidity - a crucial benefit for the post-coronavirus world.

Influx of Gig Workers

One of the biggest groups RtP stands to benefit is the newly-unemployed. The closures, temporary or permanent, of businesses across the world led to a massive wave of layoffs and furloughs. According to Fortune, 44.2 million people filed for unemployment services in the U.S. during the coronavirus pandemic, as of mid June. This spike will likely lead many who previously held full-time positions to turn to freelance or gig work as a source of income.

With a less stable income, many of these workers are likely to opt out of direct debit bill payments, as they may not be able to guarantee that their accounts will contain the necessary funds when the bills come due. But with Request-to-Pay, they get a direct line of communication with the payment requestor, as well as the ability to renegotiate and submit partial payment, allowing them to retain more control over their obligations and payments.

Lenders Pulled in Two Directions

As more people are faced with the looming or present threat of financial instability, many will turn to banks for support. This will naturally cause lenders to want to tighten their lending criteria in order to protect their assets and invest wisely. However, at the same time, due to the nature of the crisis leading to the rise in financial instability, banks and other financial institutions may face political pressure to take on more risk to help support families and small businesses.

In some cases, utility companies facing similar pressures have sought flexible tools that would allow people to slip into shortfall without taking a sizable credit hit. Financial institutions may want to adopt similar practices in order to assist their customers through these unprecedented times.

Request-to-Pay can mitigate some of the risks associated with lending by combining an instant payment function with an easy communications channel where parties can enter into a dialogue to discuss and potentially update terms of payment. This not only reduces some of the costs associated with chasing down payments, but also limits the need to involve third parties like debt collection agencies.

In many cases, it’s in the lender’s benefit to allow some flexibility in payment terms. Many customers may only need a few extra days. RtP makes it easy to formally agree to this type of modification, allowing lenders to avoid a lengthy and expensive arrears process and instead receive payment, albeit a little later.

This type of flexibility is made possible by the speed at which RtP delivers funds - that is, instantly. The ability to send and receive payments instantly creates greater liquidity, making it less risky to negotiate bills and invoices.

Conclusion

As COVID-19’s impact continues to reshape our economy, cash flow will be top of mind for small businesses. At the same time, faced with unexpected job losses, millions of consumers may enter the gig economy, forcing them to adapt to a life with less consistent income and less financial security. Financial institutions and lenders will face pressure from governments to resist the natural inclination to tighten lending criteria in order to provide support to families and small businesses as they deal with the financial fallout of COVID-19. Innovations like RtP can help dampen that blow and smooth out the transition.

New products that harness real-time payments and Open Banking are uniquely suited to thrive in this new normal. Such innovation is often stifled by apathy or inertia, but the current crisis has invigorated businesses to actively seek out paradigm-shifting solutions like RtP. As the world emerges from the COVID-19 pandemic to discover a new normal, easier, more flexible payment options may be one way it changes for the better.

For a deeper dive into how Request-to-Pay is tailor-made to solve some of today’s biggest financial challenges, download the full whitepaper here.