NetCash Automation Rules - Cash Application
Overview
NetCash streamlines the bank reconciliation process by automating cash application, allowing users to apply bank transactions directly to open GL transactions such as Bills and Invoices. This automation automatically generates the corresponding payment and closes the associated transactions.
Users can create Cash Application automation rules to configure matching logic for seamless reconciliation. Additionally, users can leverage Netgain Best Match, NetCash’s matching algorithm, to apply cash based on system-suggested matches.
The walkthrough below outlines how to automate cash application using NetCash.
Step-by-Step Process
- Navigate to NetCash > Setup > Automation Rules.
- Select New to create a Cash Application Automation Rule.
- Assign a descriptive Name to the rule and select Cash Application as the Type. Additionally, select a Status and Group.
Cash Application FIFO
An optional rule type if you'd like NetCash to apply a payment to a customer or vendor's oldest open bills until the bank amount is used up - so one payment can clear multiple bills. It applies bills in full and only creates the payment when the bank amount is fully consumed, which keeps things clean.
4. Next, make selections under Tolerances as follows.
- Amount Variance. The largest difference allowed between the Bank Transaction amount and the open GL Transaction amount for the rule to still match them; a candidate whose difference exceeds this is skipped. The value is an absolute currency amount by default - enable the amount variance percentage toggle beside it to treat the value as a percentage of the bank amount instead.
- Date Tolerance. As with GL Match rules, the Date Tolerance accepts a leading + or - to look only forward or backward by a set number of days; without a sign, the rule looks both directions from the GL Date.
- Due Date. This toggle controls whether the rule matches the NetCash Bank Transaction Date to the open Invoice or Bill’s Due Date or Transaction Date. It is off by default, matching to the GL Transaction Date.
- Date Priority. Controls which transaction is preferred when more than one candidate matches within the tolerances. Closest (default) prefers the open GL Transaction whose date is nearest the Bank Transaction date; Oldest prefers the earliest-dated transaction.
5. Toggle on Require Confirmation if you'd like to require that the matches be confirmed before matched by the system.
6. Configure variance handling. Cash Application Rules handle the two ways a Bank Transaction amount can differ from the open GL Transaction independently, and each direction has its own offset GL account.
- Variance (bank < GL) Handling - applies when the Bank Transaction is less thanthe open GL Transaction (for example, a customer card payment received net of processor fees). Options:
- Create Rounding Entry - posts the variance to a configurable offset GL account (typically Bank Service Charges or Processor Fees) as a journal entry and applies it to the matched Invoice/Bill alongside the payment, closing the transaction at face value.
- Apply Discount - posts the variance to the sales discount account and closes the GL Transaction.
- Book Difference Journal - creates the payment for the full Invoice/Bill amount and books the variance as a separate journal entry against the bank account. Unlike Create Rounding Entry, the journal is matched to the bank activity rather than applied to the payment.
- Leave Open - applies the payment and leaves the difference unapplied; the GL Transaction remains partially open.
- Do Not Match - skips the transaction. No payment is created, leaving the Bank Transaction for another rule or for manual review.
- Variance (bank > GL) Handling - applies when the Bank Transaction is greater thanthe open GL Transaction (for example, a vendor bill paid by wire where the bank deducts the bill amount plus a wire fee). Options:
- Create Rounding Entry - posts the overage to a configurable offset GL account as a journal entry and applies it to the matched Invoice/Bill alongside the payment, closing the transaction at face value.
- Book Difference Journal - books the difference as a journal entry against the bank account.
- Do Not Match - leaves the overpayment for another rule or manual review; the rule will not match it.
7. When Create Rounding Entry is selected, NetCash creates the customer/vendor payment for the Bank Transaction amount, creates a journal entry for the variance (debiting or crediting the configured offset GL account and offsetting Accounts Receivable/Payable for the matched GL Transaction), and applies both records to the matched Invoice(s)/Bill(s) to settle them at face value. This mirrors the manual Accept Payment workflow, where transactions are selected from the Apply subtab and credits from the Credits subtab. When the Bank Transaction and GL Transaction amounts are equal, no variance journal entry is created and the payment is applied normally.
Setting the Rounding GL Account
The offset account used by Create Rounding Entry defaults from the Default Rounding Account field on the bank account record, and can be overridden per rule on the Rounding Account row of the rule’s Transaction Template. Configure your standard offset account once on the bank account, and override only the rules that need a different account.
Inactive or missing offset account
If the configured offset GL account is inactive or no longer exists, the match is set to an exception and the variance journal entry is not posted. Correct the offset account on the rule or bank account record to clear the exception.
8. Click Create to save the automation rule with the specified parameters.
Additional Considerations
Cash Application Rules can include Filters, Match Criteria, and Grouping on either the Bank or GL side, along with a Transaction Template for any rounding entries that are created.
On the Review Matches page (NetCash > Bank > Review Bank Matches), matches created by Cash Application rules are identified by the Cash Application label in the match description.
The Match Assist tab can further automate cash application. Go to NetCash > Bank > Match Assist and, in the top right corner, switch to Match Assist (Cash Application) mode.
Apply filters as needed. This page displays suggested matches generated by the Match Assist algorithm, which considers amount, date, and fuzzy text matching. From here, matches can be created to apply a suggested Bank Transaction to its corresponding open GL Transaction.
