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Helen Belcher • 27 Jun 2016

The business case for automating cash-to-bank reconciliation is now well-established. Using a reconciliation system, such as Groupit, to match transactions on your bank statements to transactions on your ledgers makes the entire process quicker and gives more control over your outgoing and incoming cashflow.

However, your bog-standard cash-to-bank reconciliation doesn’t address the question of how incoming receipts find themselves on your cashbook in the first place: For this we need to take a closer look at the Allocation process.

Allocating receipts follows a similar process to bank reconciliation – acquiring transactions from a bank statement and allocating them to entries on a sales ledger. As you might expect, the same fundamental problems apply – How do you know who did it? How do you know data wasn’t fudged to make it fit? What do you do when amounts don’t match? On top of this, you need to ensure there are clear and simple routes to post onto the sales ledger.

We at Aurum Solutions implemented our first allocations solution in 2010. Our customer ran an umbrella company for contractors and needed to allocate money from clients on a daily basis in order to pay the contractors they managed. Although generally once a reference had been used by a client it tended to refer to the same contractor thereafter; the referencing process was inconsistent. Contracts ran for days or years, and there were hundreds of transactions to process a day – so many that the customer used to run their existing process three times a day.

"The process we implemented for this customer ensured that transactions from the bank weren’t duplicated, and gave the ability to match on either Gross Amount or Net Amount."

The process we implemented for this customer ensured that transactions from the bank weren’t duplicated, and gave the ability to match on either Gross Amount or Net Amount. We also made sure the system learnt from manual matches – which references it could automatically match and which references it couldn’t. By integrating with their existing systems we also accurately recorded the allocated money directly onto the Sales Ledger.

Another customer of ours needed to be able to cope when amounts owing to them were paid off in instalments – something we called Partial Allocations. This solution also had to deal with overpayments, underpayments, and payments which settled two or more invoices at once. While this might sound complicated the solution was implemented within a week. A credit to both the expertise of the Aurum Solutions team and the versatility of our software.

A decent automated Allocations system can massively benefit staff, allowing them to handle a much larger number of incoming transactions. It can also give organisations security by ensuring they have an audit trail of all the decisions made when it comes to managing cash-flow.

Allocations

Matching incoming transactions from customers to outstanding invoices is a time-consuming but important process for any organisation. Groupit can be fully integrated into existing systems allowing all receipts to be automatically processed ensuring they are complete and appropriately allocated.

Explore solution

At Aurum Solutions our experience has shown that appropriately resolving references, alongside the ability for the system to adapt and learn matching criteria, is the key to managing Allocations through an automated solution. If you’re looking for a solution for automating your companies Allocation process… you have just found it.