The recent publication from The Boston Consulting Group called ‘Why Order-to-Cash Platforms are the future’ explains why O2C (order to cash) is such a complex area of finance, and how to achieve success.
“Our analysis of O2C in a sample of manufacturing and service companies found that it comprised as many as 27 subprocesses across seven different functions,” say the authors. “The benefits of transforming the process accrue in both the short term and the long term.”
BCG claims that companies that deploy O2C platforms and reengineer the processes typically see a growth in revenue of 1% to 3% a year.
Sidetrade’s approach has always been to focus on key areas of order to cash that have maximum impact and deliver real benefits – particularly around cash collection and dispute management.
The BCG paper backs this up, stating: “It’s impossible to find a ready-made technology application that can optimize the entire O2C process.”
Instead they recommend building an order-to-cash platform that brings together capabilities from proven technologies and specialist applications.
They give three key goals to focus on:
- Reducing the process cost per order.
- Cutting DSO (through improved efficiency, accuracy, and dispute resolution)
- Improving customer satisfaction.
Their assertion that standardizing the process can only be achieved through a blend people and technology is one that we completely agree with.
At Sidetrade our approach, particularly when we introduced AI and Machine Learning capabilities a few years ago, has always been that our technology complements the skills and knowledge of the staff working in this area. We often talk about ‘intelligent automation’, focus on providing the analysis and predictions from our AI to the O2C professionals. We automate the core processes but leave the humans to focus on what they do best.
The BCG paper refers to the reality that we see with almost all of our clients – particularly the larger ones. Multiple ERPs, or different instances of the same ERP, and significant customization gets in the way of creating a single, harmonious approach to the O2C process.
Only by creating a dedicated order-to-cash platform can companies achieve a standardized, effective and efficient approach to the process, and finally deliver real customer satisfaction combined with improved cash flow and optimized working capital.
Author: David Turner, CMO, Sidetrade