Finance and Accounting

Adapting to market changes with order-to-cash automation

The pandemic, the wars, and the subsequent market disruptions have pushed business leaders to find ways to adapt proactively. Whether a business is small or large, efficiency and readiness for market changes are crucial for profitability, lasting success, and customer satisfaction. This customer-centric approach will make you feel empathetic and connected to your audience.

From customer contact to cash collection, optimising the order-to-cash process can reduce operational costs by up to 20%. A leading management consulting firm found that 69% of CFOs prioritise leading transformation programs and improving budget process efficiency. O2C automation is a powerful tool in achieving these goals.

This article covers the steps to approach O2C automation strategies for agile financial management and to adapt to market changes quickly.

How to approach order-to-cash automation?

Building a solid order-to-cash process involves robust strategies throughout the cycle. With O2C automation strategies, you can facilitate real-time order tracking, efficient order fulfilment, and inventory management.

Identifying critical activities

Begin by identifying the critical activities within the O2C cycle, some or all of which may be a drag on overall efficiency and productivity. These activities will directly impact the time and cost the company incurs. In companies with complex order-to-cash processes, this is hard to achieve manually. Embracing technology can liberate you from the burden of dissecting the O2C process, reduce unnecessary expenses, and focus efforts on areas that matter the most.

Evaluating the existing O2C processes

Once you map the O2C processes and shortlist the critical ones that directly impact productivity, you have visibility into existing workflows. This helps identify bottlenecks, inefficiencies, and redundancies. This gives you a realistic assessment and lays the groundwork for strategic O2C transformation.

Identifying problems and implementing solutions

The next step is to identify underlying problems that force you to approach market changes reactively rather than proactively. These could include bottlenecks in the supply chain, delayed order processing, internal and external communication gaps, inaccurate invoicing, etc.
By focusing on the root causes, you do not stick to surface-level improvements but deal with the core issues to bring sustainable growth. Let us look at some of the problems and solutions in detail:

• Order fulfilment time: A cutting-edge inventory management system is integral to O2C automation. It ensures accurate and real-time visibility of the stocks and uses analytics and historical sales data to predict demand. This can reduce lead times, streamline supply chains, and build strong vendor relationships.
• Invoice processing time: Electronic invoicing systems reduce the time spent on manual invoicing, whereas workflows reduce bottlenecks and improve day-to-day processes. Use automation and templates to communicate payment and cancellation terms to the customer to avoid disputes and delays in invoice processing.
• Digital payments: Digital payments are one of the major market disruptions for many businesses that are not ready with systems and processes. It is imperative that you provide online payment solutions to reduce time and cost and for the customer’s convenience. This makes reconciliation easy and increases the number of orders on the sales landing page.

Verifying compliances and violations

Non-compliance can lead to hefty penalties, litigation, and loss of profits and working capital. However, without robust systems and processes, it is not easy to keep up with changing regulations, compliance requirements, and deviations from the reference model. Ensuring compliance at every step is crucial for a robust and sustainable order-to-cash process.

Addressing and mitigating risks

From customer contact to payment and closure, the order-to-cash process is prone to risks at several levels. This includes credit management, supply chain disruption, fraud, and contract violations that could disrupt the O2C cycle.

A well-defined risk identification and management process safeguards the organisation against financial and operational disruptions.

Monitoring for improvement

Continuous monitoring of the order-to-cash process against the set metrics and KPIs is crucial to assess its performance. This includes measuring the effectiveness of set processes and systems and observing customer satisfaction scores. This is an ongoing process that helps you adjust whenever the processes are not performing according to expectations or there are changes in the market.

Leveraging automation

In large organisations, the customer and payment data are often spread out across the revenue stack. Systems that consolidate, synthesise, and normalise this data reduce friction in the order-to-cash cycle. One of the simple examples is seamless integration between the CRM, ERP, and billing systems for a smooth and bi-directional flow of data. This eliminates data silos and prepares the finance and sales teams for unexpected market changes. Secondly, by automating invoicing, payments, and reconciliation, the finance team reduces payment lead times and plug leakages.

How can Infosys BPM help with O2C automation?

The order-to-cash solution helps businesses adapt to market changes by improving the day’s sales outstanding (DSO). With technology-driven O2C automation, you drive process consolidation and harmonisation in the O2C process.

Read more about order-to-cash automation at Infosys BPM.