In B2B, Order to Cash is a complex process that involves multiple departments and disparate systems. The Order to Cash management workflow has a significant impact on the company’s revenue. As a result, most businesses tend to oil their Order to Cash well for increased efficiency. While firms rely on software such as ERP and CRM, it only takes them through the initial stages of the Order to Cash cycle, which might not be enough. With the advent of technology, A/R software has stepped in as a lifeline for all Order to Cash management processes.
To set the record straight, when it comes to Order to Cash management, there is a lot that goes beyond the standard ERP system. However, most of the companies tend to believe that the ERP system is a one-stop solution that fixes all the issues faced within the management. Such myths tend to hinder the process of multiple facets of an O2C workflow and lead the managers and analysts to question the authenticity of the process. Here are some of the ERP related myths and facts that every manager/analyst should know and understand:
Both the Order-to-Cash management system, as well as the SAP ERP, might face multiple complexities, resulting in several bottlenecks across the workflow.
In Order-to-Cash, standardization of the remittance formats becomes a necessity due to a high volume of payments done globally. Moreover, the lack of centralization in the collection process might result in the break down of the rhythm of the analysts working in the assembly line. The manual aggregation of credit data is tedious and time-consuming and could pose an unacceptable risk to the business.
ERP systems are used by major companies to support their entire O2C processes. However, with limited ERP support, businesses are prone to inefficiency and ineffectiveness. Businesses become heavily dependent on IT resources due to frequent ERP upgrades. Moreover, due to disconnected systems, there is a lack of global data visibility resulting in slower processing and inefficient collaboration.
To address the growing challenges, A/R teams nowadays are shifting towards cloud technology. However, rather than building from scratch, companies prefer to adopt best-of-breed cloud solutions and integrate it into their systems for a hassle-free experience. Some benefits of implementing a cloud-based solution are as follows:
1. Reduced IT dependency: Adopting a cloud-based solution could help your company reduce operating costs and costs related to maintaining and managing IT systems.
2. Improved collaboration: Standardized data and processes could give your company the agility to collaborate across entities and, regions thereby increasing work efficiency.
3. Enhanced scalability: A cloud-based solution is simpler to deploy and maintain, and provides enhanced scalability that could help your company allowing flexibility to support changing organizational needs.
4. Flexibility in terms of payment: Like a subscription service, Cloud-based solutions require companies to only pay for what they use and when they use it, thereby converting upfront capital expenditures into operational expenditures, leading to cost savings.
Credit Management: A cloud-based solution for Credit management could help your company customize credit applications to onboard customers faster. Moreover, features such as automated credit scoring and credit limit assignment based on risk categories could help analysts save time and effort.
Collections management: A cloud-based solution could help collectors prioritize their worklist with the help of auto-generated reports. Features such as automated dunning and correspondence could help collections analysts save a lot of time to focus on more critical accounts.
Cash Application: A Cloud-based solution could help your company automate the process of remittance aggregation. Companies could achieve straight-through cash posting. With OCR included in the cloud solutions, invoices are matched intelligently for non-standard reference numbers and missing remittances.
Invoicing and Payments: A Cloud-based solution could tokenize all the sensitive data that is gathered, and eliminates the need to store credit card information in the merchant SAP. The integration of cloud services into SAP could help in leveraging the processing of ACH, Credit Card, and debit card payments across SAP solutions.
“As per a Hackett survey, 85% of respondents indicated that the top consideration when choosing automation technology is the ease of integrating A/R processes with their ERPs.”
One should choose a cloud-based solution that could give an organization:
Order to Cash teams needs to be more efficient and proactive to prevent any untoward decline in the company’s economy. Managers at Lhoist, North America, believe that implementing an effective cloud-based solution to their existing SAP ERP system could increase the efficiency of the entire O2C process by a wide margin.
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