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Cash Application

General Finance Use Case

An AI agent that processes incoming customer payments and remittance advices, matches payments to outstanding invoices, and posts cash receipts in the ERP system, handling exceptions like short payments or unallocated cash.

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Process Details

Inputs

  • Bank payment files/reports
  • Remittance advices (various formats)
  • Open AR invoice data from ERP

Outputs

  • Posted cash receipts in ERP
  • Cleared AR invoices
  • List of unapplied cash and unresolved deductions/discrepancies
  • Cash application performance reports

Systems

Describe it in English.
It runs deterministically.

This use case solution follows these general steps at a high level.

  • 01
    Retrieves bank payment files (e.g., ACH, wire) from Banking Platforms and Collects remittance advices received via email (e.g., Outlook), EDI, or customer portals
  • 02
    Extract data from various remittance formats (PDF, email body, EDI, Excel), including invoice numbers, amounts paid, and deduction details
  • 03
    Matches extracted remittance information and bank payment data against open Accounts Receivable (AR) invoices in the ERP System. Handles complex scenarios like multiple invoices per payment, partial payments, and payments with deductions
  • 04
    Identifies and codes deductions (e.g., trade promotions, discounts, damages) based on remittance information or predefined rules. Flags discrepancies (e.g., unearned discounts, unknown deductions, overpayments) and routes them to AR specialists.
  • 05
    For successfully matched payments, the AI agent automatically creates and posts cash receipt journals in the ERP System, clearing the matched invoices
  • 06
    Generates reports on cash application rates, unapplied cash, and deduction trends.

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Frequently Asked Questions

The agent is designed for this complex, multi-source environment:
Bank Files: It can ingest and parse standard bank transmission files (e.g., BAI2, MT940) for ACH, wire, and lockbox payments.
Remittance Advices: It uses AI-powered data extraction to "read" and pull structured data from unstructured formats. It can process PDF attachments, data within an email body, customer portal screenshots, EDI files (like the 820), and Excel reports, linking them back to the bank payment data.
Customization and configuration typically take 3-4 weeks. It involves:
Discovery: Mapping your payment sources, remittance formats, and deduction coding rules.
Configuration: Setting up secure connections to your banking platforms, email inboxes, and ERP system.
Customization: Customize the agent with a sample set of your historical remittance advice
Testing: Processing recent payment batches in a test environment to validate the matching and posting logic.
Go-Live: Activating the agent to begin processing live transactions.
The agent uses a combination of methods:
Rule-Based Coding: It can be configured with rules to recognize specific reason codes provided by your customers (e.g., if a customer uses code "D1," the agent codes it as "Promotional Allowance").
AI-Powered Inference: For remittances without explicit codes, it can use natural language processing to infer the reason based on keywords (e.g., "damaged goods," "shortage," "early pay discount").
Kognitos functions as a comprehensive AI automated platform, delivering intelligent business automation solutions that optimize workflows and reduce manual effort. Kognitos integrates directly with all major ERP, CRM and productivity solutions for stable and durable automations.
The agent's AI-powered extraction can read detailed, multi-page remittance advice and match a single payment amount against hundreds or even thousands of individual invoice line items. It also handles parent/child company payments and can apply cash across multiple customer accounts based on the remittance details.

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