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What does payment allocation?

Updated: 12/13/2022
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What is the definition of cash allocation?

The cash allocation is the procedure that a "receiver of cash" (provider, owner, contractor, etc.) applies when a payment comes into his account, this means that the payment is matched with the related item(s) defined by the nature of the commercial relationship. In order to be correct, the Cash Allocation needs to match certain criterias specified by both sides on the contract. Any difference between the expected amount by the "receiver" and the amount of cash received should be documented and "well understand" by both contractual side in order to be validated. (to be continued...) The cash allocation is the procedure that a "receiver of cash" (provider, owner, contractor, etc.) applies when a payment comes into his account, this means that the payment is matched with the related item(s) defined by the nature of the commercial relationship. In order to be correct, the Cash Allocation needs to match certain criterias specified by both sides on the contract. Any difference between the expected amount by the "receiver" and the amount of cash received should be documented and "well understand" by both contractual side in order to be validated. (to be continued...)


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