December 01 , 2014

The economic situation calls for more efficient order-to-cash processes

by Working Capital Optimization, Accounts Receivable Automation

The economic situation calls for more efficient order-to-cash processesThe order-to-cash (O2C) process is critical for liquidity and working capital management, which are the main concerns of CFOs in the prevailing global economic situation. Accordingly, the emphasis on improving order-to-cash processes has increased as companies are looking for ways to get better control over the incoming cash.

This is evident from the results of an extensive survey of the receivables processes of companies in Finland, Sweden and Norway. The survey was commissioned by OpusCapita and the results are based on the answers of more than 450 respondents.

“When talking about things to be improved, the priorities might vary slightly from country to country, but the following topics are important in all three countries: minimizing the Days Sales Outstanding (DSO), the overall cost of the whole order-to-cash (O2C) process and the amount of Bad Debts, and maximizing customer satisfaction,” says Kari Martelius, Director, Receivable Manager solution, OpusCapita.

According to Martelius, these topics are not separate, and there are certain things that help to achieve all these objectives at the same time. He proves his argument by listing four steps towards a better order-to-cash (O2C) process:

The first step is to automate as much of the process as feasible. Automation makes it possible to shorten the DSO, to cut some of the costs related to the process and to decrease the amount of invoicing errors due to manual interventions.

The second step is to have end-to-end control over the O2C process for better visibility. Martelius says that there have been cases where tens-of-thousands of euros for unnecessary external financing costs have been decreased to almost zero, thanks to improved visibility of the whole order-to-cash process.

The third step is to simplify the process.

“More than one organizational unit is usually involved in the process and three to five different external partners may handle small parts of the process. This creates delays that can increase the DSO by three to five days on average. If your company has 130M€ annual revenue and you can shorten the DSO by three days, it means that you can free up over 1M€ in cash.”

In order to maintain customer satisfaction, invoice accuracy is naturally essential. When that goal is achieved, you can take the fourth step and utilize the order-to-cash process to create new business opportunitiesby connecting some added value services, such as targeted upselling campaigns and information about the company offering, to invoices.

For more information, contact:

Kari Martelius, Director, Receivable Manager solution, OpusCapita Solutions Ltd.