Order-to-cash (O2C) needs involvement from more than one department to ensure the process runs smoothly and getting a holistic picture of the workflow is tedious. Since any customer concerns regarding product quality or sales and delivery are routed via the Accounts Receivables (AR) department, these can result in payment delays and overall loss of capital.

As businesses expand and operations become more complex, the O2C certainly increases its difficulties in being managed. To streamline related operations, organizations need to adapt to technology for a cohesive and end-to-end O2C system that results in better efficiencies.

The O2C process is fraught with potential upstream issues that will have ramifications when the customer is ready to make the payment. All customer issues, including sales, products, and quality, are typically routed through the AR department during invoice payment follow-ups. Because unreported discounts, pricing errors, invoice errors, and a slew of other issues lead to unsatisfied customers and missed or delayed payments.

Receivables indicate that a company has made a sale but has not yet received payment from the buyer. Most businesses allow a portion of their sales to be made on credit, allowing customers to pay after receiving the service or product.

The majority of businesses operate by allowing their customers to buy goods on credit.

The primary issue with accounts receivable teams is that they work in silos. This implies that credit teams are completely unaware of the current collection efforts. This compartmentalized mindset results in increased write-offs due to poor customer experience and higher day sales outstanding (DSO).

We’ve already learned that the order-to-cash (O2C) process is fundamental to every organization’s basic goal of exchanging goods or services for payment, and it ensures that an organization has the working capital it needs to operate. The O2C process is critical but difficult to optimize because it includes so many customer-facing activities and inter-organizational handoffs.

Due to the complexity of O2C, stakeholders may struggle to grasp the full scope of the transformation. This is especially true for stakeholders whose work is focused on only one part of the end-to-end process and may be trapped in siloed thinking.

If involved parties lack a holistic view of what happens upstream and downstream in the current state, they may struggle to understand and buy into a future-state vision for the overall process. To help stakeholders understand the overall goals and steps of O2C transformation, leading organizations create visual transformation roadmaps.

Processes involve more handoffs from one specialist to the next as work has become more specialized. Unfortunately, these handoffs are the most common points of failure in any process. A person or group can improve their step in the process, but if they do not focus on the needs of those upstream and downstream, the overall process will slow down, circle, or fail. End-to-end processes, such as O2C, exacerbate these issues. Clear ownership and accountability encourage people to think beyond the boundaries of their component processes, preventing siloed thinking that leads to bad handoffs.

For a long time, many O2C process workers worked in functional silos. Maybe a big change for them is thinking about O2C as a cross-functional end-to-end process, as well as learning to work with an understanding of upstream and downstream needs. Other potential changes associated with end-to-end O2C process management include the introduction of new technologies and process improvements, as well as potential changes to measures and structure. That is why leading organizations incorporate strong, comprehensive change management into their O2C transformation strategy.

However, changing the organizational structure is difficult, but it is well worth the effort. Aligning the organizational structure with the O2C strategy aids in the elimination of organizational silos, simplifies reporting lines, reduces redundancies, facilitates handoffs, and improves efficiency and productivity by eliminating rogue, ad hoc practices that frequently creep into decentralized structures.

To address this, organizations should use O2C continuous improvement to identify opportunities and transform them into tangible improvements that benefit the organization, its employees, and its customers. Continuous improvement is the use of top-tier methodologies and tools to make incremental and breakthrough improvements to a process.

Furthermore, automating processes increases efficiency and productivity, shortens cycle times, reduces errors, and frees up process workers’ time to focus on value-added work. Participants in the Transformation in Order-to-Cash project’s case studies all stated that they are actively exploring, incorporating, and leveraging digitalization in their O2C transformations. The use of various applications such as AI and machine learning is supporting the O2C transformation even further and more effectively.

With SpurtCloud businesses can automate accounts receivable processes to regulate cashflow to avoid downstream consequences caused due to upstream issues.