Cash application software
Cash applied to the right open item, in the right amount.
- 01
What should have been received?
ExpectedEXPECTED$84,200100.0%Every obligation that came due this period, from every agreement.
- 02
What actually came in?
ReceivedRECEIVED$79,10093.9%All money that landed, on every rail, including money nobody asked for yet.
- 03
What have we confidently connected to an obligation?
AllocatedALLOCATED$77,60092.2%Matched to a specific obligation on a specific account, with the rule that matched it recorded.
- 04
What still needs investigation?
UnallocatedSUSPENSE$1,5001.8%9 payments held in suspense. Real money, in the bank, not yet attached to anything.
- 05
What remains collectible?
OutstandingOUTSTANDING$5,1006.1%47 accounts. This is the number that becomes the collections worklist.
The gap
Received and applied are two different numbers.
Most organizations can state what arrived in the period. Rather fewer can state how much of it has been applied to a specific open item, and fewer still can say what the difference consists of without a manual exercise.
That difference is not a rounding error. It is unapplied cash sitting on account, partials against obligations nobody has reduced, receipts waiting on remittance advice that arrived by email to one person — and every one of them makes an aging report overstate what is actually collectible.
An aging report built on unapplied cash sends collectors after customers who have already paid. That is the expensive failure, and it is invisible from the ledger.
Cash application is not data entry. It is the step that makes every downstream number true.
The shapes
One-to-many, many-to-one, and the payer who is not the customer.
One receipt, many open items
A single $5,400 transfer settling eighteen individual memberships. The receipt is one object; the allocation is eighteen, each with its own balance to move and its own consequences downstream.
Many receipts, one open item
An agreed installment plan, an underpayment topped up later, a credit note and a waiver against the same obligation. The obligation is settled when the sum discharges it, not when any one receipt does.
Payer and beneficiary are different parties
An employer, a sponsor, a parent, a relative abroad. The rail reports the payer; the obligation belongs to the beneficiary; and a model with one 'customer' field cannot hold both without losing one of them.
Cash before the open item exists
A payment arriving before the period is billed has nothing to apply against yet. It stays on account and applies itself when the obligation is raised, rather than being rejected or guessed at.
Applied in error
Reversal is a first-class operation with its own record, not a deletion. A prior period still reconciles to what it said at the time.
Payer
acc-3307Northbridge Design Partners
Not a member. Holds no entitlements of its own.
Obligation
obl-8841Annual corporate membership · $5,400
18 named architects, billed as one agreement.
Settlement
2 payments- Payment 1 · 14 Feb$3,000
- Payment 2 · 11 Aug$2,400
- Settled in full$5,400
Two payments, seven months apart, against one obligation. Neither is a whole membership; together they are eighteen.
Standing
Good standing18 individual memberships active. Each architect votes, appears in the directory and renews their certification in their own name — none of them has paid the association anything.
What you can state
Five figures, at any moment, without an exercise.
For the worked month beside this: $84,200 expected, $79,100 received, $77,600 applied, $1,500 awaiting a decision across 9 receipts, and $5,100 still outstanding.
The gap between received and applied is the one most systems cannot show you, and it is the one an auditor asks about first.
- Collected
- 93.9%
- of expected
- Matched
- 98.1%
- of received
- Open items
- 9
- awaiting a person
- Expected
- $84,200100.0%
- Received
- $79,10093.9%
- Reconciled
- $77,60092.2%
- Needs review
- $1,5001.8%
- Outstanding
- $5,1006.1%
Obligations due this period
Across five payment rails
Allocated to the obligations it settles
9 payments a person must look at
47 accounts still collectible
Questions
Cash application, answered plainly
What is cash application?
Applying incoming cash to the open items it settles — matching a receipt to the invoices or obligations it discharges, in the right amounts, so balances and aging are correct. It sits between the money arriving and the ledger being right, and in most organizations it is the least automated step in the receivables cycle.
What is a good straight-through application rate?
It depends almost entirely on how your customers pay. Card and direct debit portfolios can approach total automation because the rail carries the payer's identity. Portfolios that receive bank transfers and mobile money with free-text references cannot, and a vendor quoting a single universal figure is quoting a different portfolio from yours. The number worth tracking is your own, over time.
How does it handle remittance advice that arrives separately?
Remittance arriving apart from the money is the normal case, not the exception — an email, a PDF, a spreadsheet or a phone call, hours or days either side of the payment. Zetu holds the receipt as unapplied and reconciles it when the advice arrives, rather than forcing an allocation at the moment the cash lands.
Can one payment be applied across several open items?
Yes, and the reverse. One receipt can settle many obligations — a company paying for twenty-five members, a parent paying for three children — and one obligation can take several receipts plus a credit and a waiver. Both are ordinary, and a system that models an invoice as a single payable unit cannot represent either without a workaround.
What happens to cash that cannot be applied?
It goes on account, in suspense, and is reported as its own figure rather than netted into revenue or forced against the nearest plausible open item. Unapplied cash is a number your finance lead should be able to state at any moment; a system that hides it is not saving anyone work, it is deferring it to the auditor.
Does it post to our accounting system?
Zetu sits upstream of the ledger: obligations, receipts and allocations are created here and posted onward, so the ledger receives entries that are already reconciled. Posting to specific accounting platforms is a stated direction rather than a promise on this page — the integrations page says which, and how honestly, rather than printing ticks.
Related
- Payment reconciliation softwareThe same event from the rail's side: money arrived, what was it for?
- Accounts receivable automationWhere cash application sits in the wider receivables cycle.
- Payment vs settlementWhy conflating the two removes things you need to be able to say.
- A glossary of recurring receivablesApplied, allocated, matched, reconciled, settled — defined once.
Bring us one messy month.
Bring one month of obligations and one month of payments. We will show you what reconciles, what does not, and what that is costing you.