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Cash Application

Occasionally, a debtor will send a payment without a remittance advice. The creditor has no way to apply the payment; so it is placed on-account. Since on-account payments do not improve a credit department’s accounts receivable aging reports, so the credit department is normally anxious to find out quickly how to apply the on-account payment. The customer should be asked to provide written advice about on how the payment is to be applied. Experienced credit professionals know it is important that the creditor’s records and the debtor’s records of outstanding balances match and will not assume they know how to apply payments sent without a remittance advice.