Order to cash (OTC or O2C) refers to an end-to-end integrated process that encompasses receiving, processing and fulfilling orders, invoicing and collecting payments, and reporting and data management. The efficiency, productivity and accuracy of a company’s O2C processes can have a huge direct impact on customer relationships, cash flows and credit management as well as have a knock-on effect on overall business performance.

Though O2C constitutes a sequence of seemingly simple procedures, it is an operationally complex process requiring intricately coordinated workflows across multiple organizational teams. It is critical, therefore, to analyze and manage O2C as an integrated business system, rather than discrete components, in order to determine the best process improvement and optimization strategies. As technology emerges as one of the key levers for transformation, CIOs and CTOs will soon play a key role in delivering innovation to the O2C function.  

Factors affecting O2C

There are a range of metrics that can be used to track O2C productivity and efficiency; from process-cost-to-revenue ratios, to order-to-cash cycle times, and days sales outstanding (DSO). But none of that will matter unless businesses address one of the fundamental impediments to O2C performance – siloed functions and operations. One study about accounts receivable and O2C functions in organizations found that less than five percent had achieved full integration, less than half had any degree of formal integration and 13 percent had no coordination whatsoever.

There are several other factors that can affect O2C performance. For instance, some businesses can stumble at the first hurdle of customer data onboarding. Traditionally, a manual process, many companies still do not have the technological wherewithal to cope with the incoming flow of digital data, in multiple formats and through multiple transfer methods, and integrate it into their back end systems.

Some O2C processes are simply overwhelmed by the sheer volume and diversity of orders that are characteristic of digital multichannel commerce. Quite often, this diversity is addressed by multiple workflows and processes, governed by distinct sets of business rules, logic and procedures, that could complicate and slow down the entire process.

Systems that are not versatile, flexible and adaptable to use case exceptions or evolving  business needs can also affect O2C operations. Business users are unable to architect process flows or map data conversions, thus requiring frequent and intensive IT intervention that can hold up core business operations.

All these inefficiencies can stem from a range of issues and result in severe revenue bottlenecks or even significant revenue loss.

Optimization through Automation

But it is possible to achieve end-to-end optimization using integrated solutions and automation is increasingly becoming a central component of O2C transformation.

Many companies are already focussed on expanding the level of automation within their O2C processes. O2C automation represents a huge opportunity for CIOs to leverage technology to streamline and transform a value-intensive process in every business.

Industry-leading companies, according to one study, are 13 times more likely to pursue aggressive O2C automation. These companies combine ERP with workflow automation to standardize, integrate, automate and enhance efficiencies across the O2C cycle. Some of the benefits of this approach include a significant reduction in order fulfillment cycle times, lower DSOs and the ability to track and manage key performance metrics in real-time.

The benefits of automation

Automation can enhance all key processes in the O2C value chain. In order management, for instance, it can eliminate the inaccuracies and inefficiencies of traditional labor-intensive error-prone approaches. Automated order capture can be extremely efficient and accurate in automatically extracting and transferring order details to ERP or other business systems.  A good ERP solution, linked to a well-maintained customer, product and price master database, then enables significant integration and automation opportunities across other key touchpoints in the process like manufacturing, inventory control and procurement, accounting and shipping.

Automated invoicing applications can create and deliver invoices tailored to customer preferences, mitigating the revenue implications of errors and delays. Workflow solutions streamline the process of dealing with disputes and claims on the invoice. And most of these features are available as part of a good ERP or accounting solution or can even be integrated as a third party service to existing financial systems.

Dunning management is a critical part of the collection and risk management process. Automated dunning management can add a lot of value to a company’s collection strategy by tracking due dates, monitoring payments, attempting electronic collections, applying dunning interest rates and triggering customized notifications to different customers. Automated systems can also provide credit controllers with a unified view of customer documents and communications to streamline the resolution process in case of any queries or disputes.

Expanding and managing the role of automation

Automation has the potential to significantly alter the dynamics of O2C processes. But the challenge for IT leaders will be to keep the focus of automation on business users. The best solutions will deliver all the advertised benefits while also empowering operational users with easy-to-use self-service capabilities.  Building O2C workflows will be as simple as dragging and dropping processes without the need to code. Accommodating changes in business rules or managing day-to-day use case exceptions should be simple enough for business users to handle without the need for IT intervention.

In the near future, Accenture envisions, O2C automation will be able to deliver a 90 plus percent rate of “untouched perfect orders”. In this vision, AI-powered robots will venture beyond mere automation to parse patterns in diverse and complex datasets and autonomously solve complicated problems. Advanced analytics will provide O2C functions with the capabilities to predict and proactively deal with issues across the value chain. And a connected O2C model will shift the focus away from just monitoring transactions to holistically managing the commercial interests of the business.

A holistic approach to O2C transformation

There are several technologies, like blockchain for instance, that have the potential to become the new OTC standard for forward-thinking organizations. But technology is just one in an array of variables that govern the performance of a company’s O2C function. Technology leaders will lead the charge  of transformation but a truly holistic transformation strategy will involve pan-organizational coordination and participation. O2C-adjacent functions have to be aligned with the objectives driving the transformation. Existing organizational structures and policies need to be redefined around the operating dynamics of an automated O2C environment. Employee roles and skill sets will be required to be upgraded and calibrated towards more value-added activities. Even the culture, in terms of process ownership and cross-functional communication and collaboration, has to evolve if companies are to fully reap the benefits of O2C transformation.