Describing the Improved Cash Reconciliation Process

Previously, we explored the essential components of the cash application process in SAP S/4HANA Cloud, covering the journey from invoices to cash, including cash collection, reconciliation, and the system’s method for applying cash. Now, we turn our attention to enhancing this process with SAP Business AI to achieve greater efficiency and intelligence.

We’ll begin by describing the available options for cash reconciliation in SAP S/4HANA, providing a comprehensive overview of each step and the best practices to implement. Then, we’ll delve into how SAP Business AI can optimize this reconciliation process by streamlining and automating tasks, thus reducing manual efforts and improving accuracy. Additionally, we will explore AI-driven payment advice extraction, which enables faster and more precise handling of cash reconciliation. By the end of this section, you'll be equipped with the knowledge and tools to utilize SAP Business AI effectively, making your cash application processes more streamlined and efficient. Let’s dive into how SAP Business AI can transform cash reconciliation for the better.

Having explored the traditional cash reconciliation process, we now turn to the transformative potential of SAP Business AI in this domain. Integrating AI into SAP S/4HANA promises to significantly enhance efficiency, reduce manual effort, and improve accuracy. This advanced technology introduces three key scenarios: Artificial Intelligence, Situation Handling, and Process Automation, each contributing uniquely to a more streamlined and intelligent workflow.

Artificial Intelligence automates the matching of payment advices with open invoices, reducing manual intervention and minimizing errors. Through intelligent data extraction, AI ensures that payment advice details are accurately interpreted, speeding up the reconciliation process. Situation Handling adds another layer of efficiency by proactively identifying discrepancies and special cases that require human intervention. This feature provides real-time alerts and insights, helping users make informed decisions and resolve issues promptly.

Process Automation further optimizes the workflow by automating end-to-end processes, from data upload to cleared payments. This streamlining of tasks eliminates bottlenecks, accelerates the clearing of payments, and enhances overall efficiency. By incorporating these AI-driven functionalities, SAP S/4HANA not only simplifies cash reconciliation but also ensures a faster and more reliable financial closing process.

So, let's dive deeper into each of these areas and explore how SAP Business AI helps you to accelerate cash reconciliation cycles.

The Receivables Line-Item Matching machine learning service of SAP Cash Application provides proposals for matching receivables with incoming bank statement items and according to the confidence level and clearing-threshold automatically clears them. The Receivables Line-Item Matching machine learning service consists of two tasks:

1. Schedule Jobs
2. Reprocess Bank Statement Items

A payment advice is a notification sent by a customer to a supplier, informing them of an upcoming payment for specific goods or services. It typically includes details such as text, item numbers, and amounts. Historically, payment advices have not been directly integrated into accounting systems due to technical challenges and the time required to do so. As a result, they are often only referenced during manual payment reconciliation. With the SAP Cash Application - Payment Advice Extraction and SAP Business AI, this process becomes more efficient and streamlined.

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Now that we've covered the basics of uploading payment advices, let's take a closer look at a common challenge that can arise during the payment reconciliation process: skipped invoices. When a customer sends a payment advice, it's not always clear if all the outstanding invoices have been included. In the next section, we'll explore how to identify and manage skipped invoices using SAP Business AI, and ensure that your accounting team is notified when significant amounts are at risk of being overlooked.

In case such a situation arises users are being informed through in-app situation messages or notifications on the SAP Fiori launchpad. These notifications act as the springboard for accounts to dive deeper into the related documents to remedy the situation.

When the accountant receives a notification about skipped invoices, they can access the "Manage Payment Advices" app to investigate further. The app provides direct access to the affected payment advice, allowing the accountant to review its details and identify any discrepancies or issues. From this interface, the accountant can take corrective action, such as verifying account information or ensuring that related invoices are processed correctly. Streamlined access enables efficient resolution of payment errors, maintaining financial accuracy.

The payment advice provides a comprehensive overview of the current status of your transactions, specifically pinpointing any outstanding or skipped open items that require your attention. You can effortlessly delve into the detailed line items of the journal entry for a clearer understanding of each transaction's specifics. Additionally, all critical information regarding the customer – including their details, the associated company code, and the relevant payment reference – is conveniently accessible for your review. All the information needed to clarify the skipped invoice of the payment advice is at your fingertips.

Furthermore, the information from the situation can be used to create a dispute case based on the outstanding payment amount.