The Future of Cash Application: Why Tabs Built an AI-Powered Solution

We talk to a lot of finance professionals and there are a handful of themes that we hear no matter the size, industry, or tenure of the operator. People are concerned about scaling their teams when their department is seen as a cost center, they are anxious about training new colleagues to handle the additional work, and they are eager to level up the impact of each task they do. When asking people about what tasks are most pressing to automate, Cash Application immediately comes to mind. In the most egregious cases, companies hire entire teams to sort their bank transactions each day and mark invoices as paid, add credit memos to customer records, and reconcile fees charged by intermediaries.

Cash Application is ready to be redesigned from the ground up. Instead of relying on rule-based systems and human judgment, we’ve built an AI-driven solution that automates a painful and monotonous task for businesses of all sizes.

The Challenge: Cash Application Today

At its core, cash application is the last step in the contract-to-cash process. It identifies received payments, applies the money to outstanding invoices, and reconciles fees taken by intermediaries (like wire fees, foreign exchange fees, and credit card processing fees). Today, businesses handle this in one of two ways:

1. Manually – By downloading bank transaction lists, assessing which transaction is from which customer, and noting in an Excel document which invoices are paid and which remain due.
2. Within the ERP – By syncing bank transactions, manually matching transactions to invoices, and then creating additional transactions to reconcile fees. This benefits from automatically updating common reports like AR Aging but is tedious and error prone.

Existing cash application solutions are rudimentary, relying on static “if-this-then-that” rules. But businesses evolve, customers change payment behaviors, data quality varies, and new payment methods emerge. These rule-based approaches are insufficient for a modern company.

Tabs Has a Different Approach

The future of Cash Application uses LLMs to automate and optimize matching. It takes in context from throughout the organization including past actions and applies them to reduce manual effort and speed up reconciliation.

Here’s how:

• Adaptive Learning – Unlike rule-based systems, Tabs dynamically adjusts based on your matching behavior. If customer Google pays from an account named Alphabet, Tabs understands and remembers that connection for future matching.
• Context-Aware Matching – Instead of relying on exact amounts or static rules, our AI is able to make assumptions based on the timing of an invoice, customer name, amount and when the payment comes in.
• Scalability Across Business Types – Whether you’re a marketplace processing bulk payouts or a SaaS company reconciling high-volume transactions, our model adapts to your business needs.
• Better Stripe Matching – For customers paying with a credit card or ACH debit, our system accurately assigns payments and records an expense for fees charged by the intermediary.

Why We Built This

As businesses grow, Cash Application becomes a cost center that scales negatively. Prior to Tabs Cash Application, customers complain about:

• Dunning processes triggering incorrectly, frustrating customers.
• Errors in financial reporting due to unaccounted billing discrepancies.
• Needing to give outsourced bookkeepers access to the ERP and all company financials 

To alleviate these concerns, Tabs Cash Application provides for:

• More Accurate Payment Digests – Excludes bad debt and bank fees for a true financial picture.
• Correct Payment Dates – Ensures payments are recorded on the actual date they clear.

• Faster Cash Collection – Reducing manual processes shortens the time to reconcile payments.

By eliminating manual reconciliation pain points, Tabs enables finance teams to focus on strategic work instead of chasing transactions. Cash application shouldn’t be a burden—it should be an intelligent, automated process that scales effortlessly with your business.