What is cash collection software? A quick guide

Arjun Ruparelia

18 Jul 2023 - updated on 20 Jul 2023

Reading time: 5 min.

Did you know you could be losing money due to inefficient cash collection processes? As per a Deloitte report, inefficient accounts receivable policies can trap the cash on the balance sheet. This can affect liquidity, and eventually, the profitability of your firm. Fortunately, there is a solution — cash collection software.

A cash collection software or a cash collection app optimises and automates the process of collecting payments from your customers. Continue reading to know the cash collection process, what is collection software, and how to choose the best cash collection software for your business in 2023.

What is the cash collection process for companies?

The process of collecting payments from customers who have purchased goods/services from you on credit is called the cash collection process. It begins when you send the invoice to your customer, remind them to make payments, and send customers.

It also involves tracking and reconciling payments, resolving discrepancies, and taking appropriate measures to resolve overdue accounts. This process is also known as accounts receivable management or credit management.

Cash collection example

Here’s an example to understand the cash collection process:

Company P sells ACs to another business C on credit with a payment term of 30 days. Company P sends an invoice to C with the details of the ACs sold and includes the due amount and deadline. A week before the due date, P emails C to remind it of the upcoming payment. Upon receiving the reminder, C sends the payment to P and confirms it by email.

Now, it is the responsibility of company P to record this payment, reconcile it in its accounting system, and update C’s account balance.

Cash collection methods

Cash collection methods are ways in which a business can collect payments; some common methods are as follows:

Cash in advance: The customer must pay the full amount before the delivery of the product. This method eliminates the risk of non-payment and overdue.
Letter of Credit (LoC): The customer could get a bank to guarantee the payment on their behalf with an LoC. The seller sends the products to the customer, the customer shows the LoC to the bank, and the bank then pays the seller. This method reduces the risk for both seller and customer.
Documentary collection: In this method, the bank collects the payments from the seller and sends it to the customer.

So, how do you manage cash collections? The perfect way to go about it is to sign up for a cash collection app or software. In this article, we will explain what cash collection software is and how you can choose one.

What is a cash collection software?

Cash collection software automates the cash collection process for your business. It can automate your business’s credit management, payment collection, invoicing, reconciliation, and other processes.

While choosing a daily cash collection software, ensure that it matches the following criteria:

User-friendly interface.
Advanced features, such as:
- Sending automated reminders to customers,
- Generating reports on the debt collection process,
- Scheduling recurring payments, payment reminders, and payment plans, and
- Personalising workflows for every customer.
Integration with accounting software and CRM.
Reliable, secure, and safe software.
Affordable and transparent pricing.

Best Cash Collection Software in 2023

Based on the factors mentioned above, the following are the top two cash collection software in 2023.

Agicap

CashCollect by Agicap is a cash collection software that speeds up your cash collection process by automating customer reminders, thereby saving 50% of your time in receivable management. It reduces non-payments by 30% and reduces days sales outstanding (DSO) by 10%.

Agicap syncs your invoices to monitor your outstanding bills in real-time, detects payment delays and prioritises their collection, makes reminders, call reports, and notes available at a single dashboard, creates customised follow-up templates, automates recovery plans and combines them with email and other modes of communication, monitors improvement of your payment times, and analyses performance to improves your cash flow.

CashOnTime

CashOnTime by DIMO Software optimises your accounts receivables process by ensuring optimal coverage and connection of all the steps. It can increase your recovery actions by 40%, reduce DSO by 20%, and enhance productivity by 100%. It leverages artificial intelligence to segment customers and optimise collection strategies based on their risk profile and payment behaviour.

This solution automates reminders and follow-ups via emails, tracks payments and reconciliation in various modes, handles customer disputes and manages deductions, generates reports and analytics on cash collection processes, and calculates provisions for doubtful debts. This saves time in closing operations.

Cash collection system: Optimise your debt management

These cash collection software can be leveraged by any business looking to optimise its cash flow, improve customer relationships, and reduce bad debts. A cash collection software ensures this by automating your invoices, sending payment reminders, reconciling payments, and getting insights into your cash performance.

Software like Agicap and CashOnTime offer features such as multi-channel payment platforms, real-time dashboards, AI-powered forecasting, and personalised customer engagement. This can help any small, medium, and large-sized business by streamlining their cash collection and management processes and improving their profitability.

Why opt for a cash collection software?

Successful companies use cash flow collection software to reduce human errors arising out of manual processes involved in collecting cash from customers.

👉 Cash flow collection software can help businesses improve service delivery by automating invoices, unpaid invoice reminders, payments, and reconciliations.

👉 It can help businesses improve cash flow visibility, reduce bad debts, and enhance customer relationships.

👉 Cash flow collection software can help businesses avoid unpaid invoices by providing timely alerts and flexible payment options. Additionally, it can help businesses resolve disputes with customers more efficiently by providing dispute resolution features.