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3 Reasons Order-to-Cash is Stuck in the Dark Ages

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Sarah Fane
Jan 6, 2023

The most powerful apps on our smartphones – Amazon, Uber, Google Maps, Netflix – use a mix of big data and artificial intelligence (AI) to deliver a frictionless user-experience that is customized for each of us.


The world of enterprise software offers a much less satisfying user experience.  Yes, businesses have been busy digitally transforming to great effect in some areas, but finance and Order-to-Cash (O2C) continue to be burdened by arcane processes and systems.


sharedserviceslink and HighRadius partnered to conduct a survey to understand how and why Order-to-Cash and Accounts Receivable (AR) departments are often left behind in digital transformation efforts, and what you can do to help modernize your department.

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Here are 3 findings regarding what is keeping Order-to-Cash stuck, and how to find freedom and digital advancement.


Problem 1: Order-to-Cash is Operating in Silos

The Order-to-Cash process is a complex process that extends across many different functions in the business, from sales to finance and fulfilment. Often the main issues causing the pain points in Order-to-Cash actually originate outside of the O2C process.

42% of our survey respondents said that the lack of coordination between sales and finance is keeping them from achieving their goals for the coming year. You can implement an expensive solution to send invoices automatically, but if your sales team is not entering data correctly, you will still face the same problems and disputes.

When Order-to-Cash teams try to refine their processes within the four walls of their department, they are likely not getting to the root cause of the issue. The success of the process relies on several functions working together.


Solution:

Gaining influence to change the processes outside of your department is easier said than done. However, an authoritative global process owner (GPO) for Order-to-Cash can make a big difference – so long as they have power.

An authoritative GPO must be equipped with the ability to identify improvements and drive change. A GPO would look to bring together functions and ensure common goals, shared projects, and shared KPIs.

Process owners need to be able to fully understand the processes they are owning and improving, have a commanding authority in the organization, be close to the C-suite, and have skills and a budget to drive change.

 


Problem 2: Unable to Communicate the Business Case to the Budget Holder


Your operational AR or O2C team knows the pain points in your processes. They live with errors, manually build reports, and chase payments every day. However, with multiple competing priorities within the business, Order-to-Cash automation remains low on the corporate agenda.

Solution:

Map out the end-to-end process before looking at automation solutions, and make an effort to “speak the language” of the wider business. Over the last few years, many finance departments rushed to fix parts of their processes with bots or dedicated software to solve specific issues in their process. Now, we are seeing world-class organizations trending towards looking at integrated solutions that address issues and fulfil needs across the entire order-to-cash process, intelligently.

To sell change to the business, O2C leaders need to build a business case that will speak to the leadership team. Listen to the leadership team’s key goals for the next 12 months, and make sure your business case aligns with these goals. Use their language. Sell their vision. Get them excited and on board, and make sure they prioritize the funding of your program ahead of other requestors.

From a CFO’s perspective, think of how improvements to your department could lead to:



  • More money coming into the organization by capturing invalid deductions and reducing past-due bad debt.
  • Increased cashflow. Lowering Days Sales Outstanding and Days Delinquent will improve your organization’s total asset turnover ratio.
  • Better customer satisfaction. Your customers expect straight-through orders without having to dispute. Anything less than that can drive away business.
  • More insight into cash flow and opportunities. Good visibility into when customers will pay will make it easier to forecast accurately.



Problem 3: Lack of Modern Processes’ Impact on Staff Retention

When processes are highly manual, not only does it impact your cash flow and process visibility, you might struggle to retain your top performers. The best and brightest finance teams might start looking to work somewhere where they can use their analytical skills, not just chase payments. 

Generation Z will not tolerate arcane systems. Growing up with iPhones and gaming technology, this generation has very limited patience for antiquated systems that are rooted in the dark ages of business technology.

You will fail to attract good people if your systems and processes don’t strive towards touchless. And they will be keen to leave if there’s no sign of their department changing any time soon.

Solution:

Make talent acquisition and retention part of your communication deck to your budget holder. Make sure they are fully aware of how arcane systems will add to the challenge of attracting and retaining top talent. Also, the cost of training and re-training new-hires who leave quickly is often left out of business cases.

If you want your department to be customer-facing and deliver actionable insights and accurate forecasts, you’ll want a team with analytical skills and a strong understanding of the business’ requirements. You will struggle to keep smart people on-board if they are bogged down with manual, repetitive tasks.

Summary

Order-to-Cash is more likely to be fragmented than many other business processes. When looking to drive improvements, don’t try to enhance your processes within a silo. Before rushing to automate, map out your entire process end-to-end and, when looking at solutions, be mindful if you are patching a problem with technology, or if it is a tool to drive change for the long term.


A broader view of your department will make your proposal more attractive to budget holders. It will naturally have more appeal to those who don’t really understand the intricacies of the order-to-cash process.

AI-based software has come a long way in the last few years and, as our survey found, many are unaware of its more advanced capabilities. AI-powered software can make your process autonomous. Autonomous finance processes still need people, but your trained teams will spend more of their time on strategic tasks while the software will:

 


  • Segment your customers and predict payment dates
  • Prepare the invoice and deliver it to the customer
  • Automate cash application and capture remittance data across various platforms
  • Predict blocked orders
  • Send automated dunning emails
  • Take notes and minutes of collections calls automatically and draft follow-up emails with minutes and actions
  • Provide you with better visibility into your cash flow and the ability to provide the right analytics to senior leadership, which is essential to a high-functioning O2C process

 

Don’t be responsible for letting Order-to-Cash rot. Digitize now to stay current and competitive.  If you haven’t re-examined what order-to-cash technology can do now, it’s well worth looking at how far the technology has come.

Download the infographic

Read the E-Book

Watch the webinar for analysis


Article commissioned by HighRadius

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