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What is Cash Posting?

What is Cash Posting?

Cash Posting Definition

Cash posting or payment posting is a part of the billing process where companies track and record incoming payments. It's the final step in the order to cash payment cycle. 

The cash posting process helps capture precise and prompt payment capture in the revenue cycle when an incoming payment is made through different methods, such as cash, card, or check.

Payment Posting Steps

  • Receive Payments: Companies must identify the source and payment mode after collecting the accounts receivable.
  • Payment Verification: Remittance verification happens through a cash application.
  • Allocation: An electronic remittance advice is attached to customer accounts or invoices. This helps ensure the records reflect outstanding invoices and cleared invoices.
  • Accounting Software Capture: Next, the accounting software captures the payment information. This includes general ledger, payer accounts, and other records.
  • Bank Reconciliation: Cash posting includes reconciling through a journal entry for proper revenue cycle management. 

Efficient cash posting is essential for record-keeping, cash flow, and insights.

Accounts receivable automation solutions (or accounts receivable software) streamline the cash posting process, reduce errors, and improve efficiency.

Note: Denial management resolves rejected claims to get payment. It drives cash posting efficiency by quickly capturing reimbursements.

What is a Claims Submission?

A healthcare provider submits medical billing claims (DME Billing) to insurance companies. These list the services, procedures, tests, medical coding, and charges. 

The healthcare provider records the payment once the insurance companies process claims and pay.

The medical billing process includes payment matching to patient accounts and claims, with adjustments for denials and discrepancies.

Submitting claims impacts cash posting success. 

Cash Posting Benefits

Cash Flow Management

It provides real-time visibility into cash inflows, helping companies manage and perform cash flow forecasts. Cash flow management is essential for short-term financial obligations and making better decisions.

Customer Account Updates

Provides timely updates to customer accounts, allowing accurate outstanding balance tracking and preventing overdue invoice risk.

Accounts Receivable Management

Helps identify and act on late or missing payment issues, which helps with proactive accounts receivable management.

Efficient Reconciliation

Helps with smooth bank reconciliation. This lets teams know about errors in internal records and bank statements. 

Financial Decision-Making

Provides updated financial data critical for planning, strategizing, and assessing the organization's health.

Errors and Discrepancy Identification

Minimizes the error risk associated with manual data entry, reducing the financial record inaccuracies.

Streamlined Receivables Process 

Automating cash posting processes increases efficiency, reduces manual effort, and speeds up transaction processing.

Compliance and Audit Trail 

Enables compliance with accounting standards and provides a clear audit trail. This makes it easy for a company to demonstrate accountability during a financial audit.

Note: Cash management strategies optimize a company's liquidity, and cash posting records customer payments.

Who Handles Cash Posting?

A company's cash post office generally handles the process. 

Here are the key roles involved in the cash posting process:

  • Accounts Receivable Team: The Accounts Receivable team manages customer invoices, tracks every electronic payment, and matches incoming cash posting to customer accounts.
  • Cash Application Specialist: A cash posting specialist or cash posting representative focuses on cash receipts posting. 
  • Finance or Accounting Manager: The job description of a finance or accounting manager is to handle the cash posting process. 
  • Treasury Department: In some companies, the treasury department takes care of the cash posting process. This helps manage cash flow and bank reconciliation.
  • Automated Systems and Software: You can use an automated cash posting system and accounts receivable automation software. Third parties will be involved if a company opts for payment posting services.
  • Sales and Customer Service Teams: Cooperation with sales and customer service teams is vital to resolve issues or handle payment inquiries. 

Note: A deposit is having funds in a bank account.

Manual Payment Posting Challenges

  • Data Entry Errors: Manual payment entry increases errors, like miskeyed numbers or incorrect amounts. 
  • Time-Consumption: Manual payment posting is time-consuming. This delays updating customer accounts and financial records.
  • Increased Labor Costs: Manual intervention requires additional time and increases labor costs. It also diverts resources from more strategic financial tasks.
  • Limited Scalability: Manual processes are inefficient as the cash transactions increase. Scaling processes to accommodate business growth is challenging without automation. 
  • Missing Payments: Human oversight leads to missed payments or late postings, affecting customer relationships and accounting reconciliation difficulties.
  • Posting Procedures: Individuals can use different approaches to manual payment posting.
  • Reconciliation: Bank statement reconciliation with internal records can be challenging.
  • Real-Time Visibility: Manual processes lack real-time cash flow visibility. Payment posting delays can hinder decision-making. 
  • Security Concerns: Manually handling sensitive payment information poses security risks. 
  • Personnel Dependency: A manual payment posting process depends heavily on specific people, making the company vulnerable when there's a personnel change or absence.
  • Complexity in Handling Exceptions: Handling exceptions, like partial payments or unusual transaction scenarios, is complex and error-prone.

Companies use automated solutions such as an accounts receivable automation solution or cash application software to tackle these challenges.

Payment Posting Process Automation

Boosted Cash Posting Efficiency 

Automation boosts cash posting efficiency. This allows companies to handle cash transactions seamlessly, accommodating business growth without sacrificing speed. 

Routine task automation reduces labor costs and lessens the need for manual intervention, freeing up valuable resources.

Real-Time Cash Flow Visibility

Automated cash posting also provides real-time visibility into cash flow, offering insights for better decisions. It promotes consistency, making the entire process more uniform and reliable. 


Additionally, the security measures with automated systems help safeguard sensitive financial information. This simplifies reconciliation, ensuring proper financial records alignment.

A case study on cash posting can provide detailed insights into the process's effectiveness and challenges within an organization's financial operations.

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