What does a world-class organization look like in customer-to-cash, and what are those characteristics?
On a recent webinar, Bryan DeGraw from the Hackett Group outlined 10 characteristics of
There a lot of different names for the Accounts recievable team. Sharedserviceslink prefers Order-to-Cash, but The Hackett Group uses Customer-to-Cash. You may also hear this department referred to asOTC, O2C, or Credit and Collections.
These 10 characteristics are not in a rank order. They are numbered, and there are 10 of them, but they are in no particular order.
1. Credit policy. Many organizations have some form of a credit policy. But for some of them, it's a document that's stuffed in a drawer. Or something that they may look at periodically. But it's not when I say it's dynamic, it's not really embedded in the process. It's not and it's not being measured. World class customer-to-cash organizations provide framework for the end-to-end process including roles and responsibilities across the O2C process
2. Master data. It’s important it is to have good master data, and good processes around the governance of new records record changes, and then cleansing of those, records. Where that really reflects, is in terms of the quality of transactions. The accuracy and timeliness of transactions. And ultimately flows into other parts of your organization, especially when it comes to analytics and, business intelligence, using that transactional data to be more predictive, to better improve your process. That's really difficult to do when a high percentage of your transactions are inaccurate and untimely because the input data is inaccurate.
3. Standardize payment terms and controls. World class organizations have standard payment terms defined, and non-standard payment terms are controlled through approval process.
4. Dynamic credit management. What’s crucial is that credit management isn’t just static. While it needs defined inputs, outputs and strategies. Reviews need to be taken and the strategy should be dynamic.
5. Electronic invoicing. World class order-to cash teams strive to eliminate manual billing triggers and use e-invoicing to reduce time to invoice and increase accuracy.
6. Segmenting the customer base with within your AR portfolio helps drive better and more effective processes when it comes to your credit evaluation, but most importantly, how you touch customers to ensure they pay on time. More detail on segmentation strategies here.
7. Proactivity. Ensure key customers are receiving routine customer service calls so issues can be addressed early in the process. World-Class accounts receivable or order-to-cash teams make calls that aren’t always chasing payments.
8. Technology. Organizations that are world-class are certainly leveraging technology to then enable those best practices and, you know, towards the end. And again, it's it's so critically important.
9. Effective dispute management. Disputes should be logged in a central repository, workflow underpinned by resolution matrix. This helps you develop your detective skills and get to the root cause of disputes.
10. World-class organizations are measuring their processes. They're measuring their performance. Not just outcome metrics, like, what is the cost per unit? And, you know, what is the number of FTEs we have, but metrics that are really exposing the effectiveness and the quality of their work. Read more about AR benchmarking.
You can view the full webinar here and read more AR content here.
To read this article you have to be registered.
Become a member to access all content and / or download it