What Is CTX and How Does It Help Accounts Receivable?

Complex, manual reconciliation is more than just a trouble spot for accounts receivable teams. It can be a barrier to better cash flow.

One potential salve is Corporate Trade Exchange, or CTX. This is a method used by businesses, banks, and governments to move Automated Clearing House (ACH) payments with greater automation. The chief appeal of CTX for many businesses is its rich, detailed remittance information, which allows for one payment to be sent for many invoices.

From the accounts receivable perspective, that detailed remittance can be a tremendous timesaver. CTX enabled for businesses can make reconciliation much more efficient and less error prone. Certain payment types, such as Bottomline’s Premium ACH payments made through Paymode, provide enhanced remittance capabilities that specifically support the CTX format.

In this article, we’ll break down:

• How CTX works and how accounts receivable teams benefit
• Why Bottomline utilizes CTX for Premium ACH payments
• How CTX can accelerate time-to-cash

How CTX Works

At its core, CTX is a standardized format for ACH payments. Unlike standard ACH formats that carry limited information, CTX can include hundreds of lines of remittance detail, making it ideal for organizations that need to reconcile multiple invoices with a single payment. It’s also highly beneficial for businesses that need to automate and reconcile a high volume of business-to-business (B2B) transactions. 

When ACH payments are sent using the CTX format, extensive remittance information is transmitted using what are known as EDI 820 standards. An unlimited amount of remittance detail can be included thanks to those standards, making room for dozens or even hundreds of invoices, purchase orders, and other key matching data to be transmitted.

Take this hypothetical. A large furniture company might send one ACH payment to a specific supplier that covers 50 separate invoices, each invoice itemized in the payment file to allow the accounts receivable team to automatically apply cash without having to hunt down and manually reconcile 50 payments to the 50 invoices. It’s easy to see how enterprises with huge transaction volumes or complex billing processes could save many hours and eliminate costly errors when taking advantage of payments that include CTX, but even small businesses benefit.

Why CTX Matters to Accounts Receivable Teams

What do AR teams gain when accepting ACH payments with CTX? For starters, speed, efficiency, and elimination of errors are key pieces of the CTX value proposition. Here are the biggest gains for suppliers and their AR teams, in no particular order, when accepting ACH payments with CTX.

Faster Cash Application

Manual cash application is a massive time sink for most businesses. When payments arrive without sufficient remittance detail, teams must track down missing information, match payments to invoices by hand, and manually enter data into ERP systems. CTX eliminates this friction by delivering structured remittance data electronically that can then be automatically ingested and applied, cutting out multiple steps that would prevent easy cash application.

Reduced Days Sales Outstanding (DSO) and Better Customer Relationships

Having to hound a customer to collect a payment is no one’s idea of a fun time, and having to go to that payer to find missing remittance details isn’t either. CTX ends the need for those unpleasant calls and conversations since all the necessary information for reconciling payments arrives with the payments themselves. CTX also enables companies to reduce their DSO, which is the average number of days it takes for a company to collect their payment after a sale. This gets cash into the business’s accounts faster, improving liquidity and freeing up working capital, both of which help keep a company healthy.

Improved Forecasting and Visibility

With CTX, payments arrive with clear, structured data that can be tracked and analyzed in real time. This improves visibility into cash flow and enhances forecasting accuracy, allowing finance leaders to make more informed decisions without needing to turn to staff or pore through an eye-crossing number of payments and invoices.

Improved Accuracy

When you’re matching dozens or even hundreds of invoices and payments by hand, human error inevitably creeps into the process. A mismatched payment and invoice can lead to real problems, from accounts coming up short to failed audits, especially when mismatches aren’t caught quickly. Because CTX removes the need to manually reconcile payments and invoices and is highly accurate and automated, your error potential is significantly reduced.

Why Bottomline Offers Premium ACH with CTX via Paymode

The Paymode network, where 600,000 businesses exchange over $500 billion in business-to-business payments annually, allows payers to issue multiple electronic payment types to their vendors. Premium ACH payments allow vendors to receive CTX remittance data with every ACH they receive. To learn how Paymode’s Premium ACH offering is distinct from standard ACH payments, check out this detailed article.

Paymode allows both payers and suppliers to digitize their payments processes and boost their fraud protection. By leveraging CTX via Premium ACH payments, Paymode also ensures payments arrive quickly and with the data that vendors on the network need for straight-through processing, eliminating manual steps and accelerating time-to-cash.

Because it simplifies reconciliation and eases payer-vendor friction, CTX has long been viewed as a core offering for Bottomline customers.

What does this mean in practical terms? Consider one device manufacturer that decided to accept Premium ACH payments through the Paymode network. By opting to receive Premium ACH payments and turning on the CTX functionality, this company achieved 100% auto-application of incoming payments through the network, surpassing internal benchmarks, and realizing the benefits of faster, more efficient reconciliation in the process.

The Bigger Picture: Time-to-Cash and Strategic Finance

The benefits of CTX go beyond operational efficiency. In the recent PYMNTS Intelligence Time-to-Cash study, high-performing businesses were found to have 27% higher AR automation rates and significantly greater confidence in cash flow forecasting. But automation is not possible without structured data.

CTX provides that structure. When paired with a robust business payments network like Paymode, it becomes a strategic lever for CFOs who want to optimize liquidity, improve forecasting, and future-proof their finance operations. That all speeds time-to-cash, improving the holy grail of financial operations: working capital.

CTX can significantly improve efficiency, visibility, and error-reduction for AR teams. That makes CTX one of the most critical facets of any good reconciliation process featuring ACH payments.

Learn more about Premium ACH and CTX