Cash application services: every payment matched to the right invoice

What cash application is

Cash application is the process of matching each incoming customer payment to the open invoice or invoices it pays, then recording it in your accounting system so those invoices show as paid. The pieces are simple:

• The payment: a check, ACH, wire or card payment.
• The remittance advice: the details of what the payment is for, which invoices, and why the amount differs if it does. Sometimes it's on the check stub, sometimes in a separate email, sometimes on a customer's AP portal, and sometimes it doesn't exist.
• The open invoices in your books.

The job is to connect the three accurately.

Why it gets messy

A payment for the exact amount of one invoice with the invoice number on it is easy. B2B payments often look different:

• Lump payments. One payment covering several invoices, sometimes from different months, with no list of which ones.
• Short pays. The customer pays less than the invoice: an early-payment discount they took, a disputed line item, a freight charge they didn't expect, or a simple mistake.
• Overpayments and duplicates. The same invoice paid twice, or paid by a parent company and a subsidiary.
• Missing or separate remittance. An ACH arrives with only the payer's bank name, and the remittance email comes days later, or never.
• Unfamiliar payer names. The payment comes from a parent company, a payment service or a name that doesn't match the customer record.
• Partial payments. Part of an invoice paid now, the rest later, and the open balance needs to stay right.

What goes wrong when it's not done

Payments that can't be matched tend to pile up as unapplied cash or get posted to whichever invoice looks closest. Either way, problems follow:

• Your aging report shows invoices as overdue that were actually paid, and others as paid that weren't.
• Customers get reminders for invoices they've already paid, which is one of the quickest ways to irritate a good customer.
• Short pays go unnoticed, so a dispute or an unauthorized deduction never gets raised while it's fresh.
• Forecasts and month-end close are built on a ledger you can't fully trust.

How Mitt handles cash application

Cash application is part of Mitt's full AR service, alongside reminders, reply handling and forecasts. The approach is simple: let software do the obvious matches, and have a person look at anything that isn't obvious.

1. Gather the remittance. We collect remittance details from wherever they arrive: payment records, emails and customer replies.
2. Match the clear ones. Payments with clear references and exact amounts are matched to the right invoices.
3. Check the unclear ones. Lump payments, short pays, unfamiliar payers and missing remittance are reviewed by our team instead of guessed at. Where we need it, we ask the customer, politely and in your name, what a payment covers.
4. Bring decisions to you. A short pay might be a fair discount, a dispute or an error. Whether to accept it, credit it or chase the difference is your call, and write-offs and credits always need your approval.
5. Keep follow-up in sync. Because reminders and cash application happen in one place, a customer who just paid doesn't get chased for that invoice.

Payments made through Mitt's customer payment page go through your own QuickBooks payment account, so they're recorded in QuickBooks with the invoice already attached. Mitt never receives or holds your money.

Working with your bookkeeper

If your bookkeeper already records payments, we agree in writing who records what so nothing is entered twice. You can also keep cash application in-house and use Mitt only for reminders and replies. Learn more about how Mitt works with QuickBooks.

Pricing

Cash application is included in full AR, which is quoted per client based on your volume and how your customers pay. AR follow-up on its own starts from $1.25 per invoice with a $750 monthly minimum. See pricing.