Reimagining Receivables: How AI and Automation Are Unlocking Working Capital

Finance leaders must navigate changing business environments while driving business growth and maintaining efficiencies.  Many are turning to automation. This tool not only enhances business processes but is proven to unlock working capital.  Most notably, automation is being used to assist with a critical — yet manual process — cash application.

For AR teams, matching payments to invoices has long been a tedious and error-prone process. Even with modern ERPs in place, many organizations still have challenges with manual tasks — keying data, aggregating remittances, manually matching payments, applying & coding deductions. The result? Slower reconciliation, delayed cash visibility, and extended Days Sales Outstanding (DSO).

But that’s changing fast. 

AI and Machine Learning: Automating the Back Office

Automation is a key initiative for many finance leaders, as it enables finance teams to gain the capacity to meet ever-growing demands. Many finance teams are struggling to attract qualified talent forcing them to do more with less. Emerging technologies like artificial intelligence (AI) and machine learning (ML) are transforming the way finance teams operate.  Applying this technology in accounts receivable is swiftly optimizing workflows.

As complexity and manual challenges persist in cash application—decoupled remittances and payments, missing information, short payments, single payments for multiple invoices, coding deductions—automated cash application tools powered by AI and ML streamline processes for straight through posting:

• Digitize and interpret remittance data from various sources (emails, PDFs, bank files)
• Intelligently match payments to the right open invoices
• Enable faster identification of deductions and automatically applying GL reason codes.
• Flag exceptions for review and even learn from past corrections
• Deliver real-time reporting on outstanding receivables

And perhaps most importantly, reimaging processes free up finance teams to focus on high-value initiatives—from cash forecasting to growth planning. 

The Impact on DSO and Working Capital

When payments are applied faster and more accurately, businesses gain near-immediate visibility into their cash position. This automation drives smarter, more insightful information into receivables management:

• Reduced DSO: Accelerated cash application means greater liquidity
• Better forecasting: Real-time receivables data improves financial planning
• Greater efficiency and reduced costs: automating routine tasks like data entry, payment matching and application reducing errors and research
• Stronger customer relationships: Accurate application prevents disputes and unnecessary collection calls

Simply put, faster cash application directly enhances working capital. This isn’t just a productivity boost — it’s a strategic advantage.

A Smarter, More Scalable Future

Many finance professionals are challenged to support business growth while maintaining efficiencies. Automation is key to building the foundation, not only for today, but for the future supporting accurate and timely visibility of cash.  Finance teams are expected to do more—and when powered by the right technology—teams are positioned to be an engine for growth

At M&T Bank, we understand that efficiency isn't just about speed—it's about optimization—creating a resilient organization as companies grow. By connecting our clients with insights to help leverage automation through AI and machine learning, we're helping finance leaders improve their working capital and enabling finance teams to plan more confidently for the future.

For CFOs, success hinges on automating the finance function.

This isn't just about speeding up processes or cutting costs—it's about unlocking smarter, faster and more sustainable ways to grow 

Want to unlock working capital and streamline receivables?
Connect with your Relationship Team today to see if an AI-powered cash application solution is right for your organization.

M&T Bank’s Commercial Service Team at 1-800-724-2240
Monday-Friday, 8am-6pm ET