The 6 Big Unfortunate Truths of O2C

Introduction

The order-to-cash (O2C) process is fundamental to the basic objective of every organisation—exchanging goods or services for payment. With O2C crossing so many customer touchpoints and involving hand-offs to different departments, standardisation can often seem like herding cats.

HighRadius teamed up with SharedServices Link and British Telecom’s Transformation Program Director, Jas Khatkar to discuss the 6 Big Unfortunate Truths of O2C that are likely to come out of any O2C transformation journey.

If you run Accounts Receivable out of a Shared Service, are striving for end-to-end transformation, planning a Global Process Owner (GPO) framework, or are on the process standardisation journey, then don’t miss this advice.

The BT Story – Digital Transformation Services for Smarter Communications

A seamless customer experience—aka an omnichannel customer experience—has been the expected norm for years. When engaging with brands, customers expect an effortless transition from one touchpoint to another, whether it be digital channels, in-person, or both.

Billing is an essential part of this strategy and BT uncovered significant issues from the front office where sales are made, through to order management, billing, and customer services.

30% of customers were receiving incorrect bills, sales teams were spending 15% of their time on non-revenue generating activities and 40% of revenue was billed manually.

Client and employee satisfaction scores were low and BT realised they quickly needed to look internally at the root cause of some of these issues and find ways to quickly improve the customer journey, leveraging digital transformation.

1. Lack of end-to-end ownership

This is a common problem found in most organisations. Where the O2C process touches so many different functions and processes, it’s hard to find one person who is responsible for the entire end-to-end O2C journey aside from the CEO!

Where O2C has been migrated to Shared Services, there may be an O2C GPO who has overall responsibility, but this often occurs in the more mature stages of a Shared Services or Global Business Services operation, once transactional services are stable.

To ensure a clear and transparent end-to-end O2C process, roles must be defined with agreed handoff points and SLAs employed between departments.

Once this is achieved, customer journeys should be mapped to the various touch points within the organisation, prioritising processes for automation and assigning clear owners.

2. Conflicting Objectives & Strategies

All organisations push hard for revenue. While the main goal is to sell, if you are not effectively collecting, the effort is wasted.

Examples of conflicts that impact the O2C process include:

• Sales – revenue increased sales targets (sell whatever to whoever mentality)
• Commercial & contracting – over-complicated deals and complex discounts
• Customer service – one version of the truth
• Billing & collections – timely accurate bills and cash collection/bad debt

These are all interconnected, and the unfortunate reality is they will all suffer if the O2C journey is broken.

An end-to-end O2C platform can track your O2C process from the time an order is made until it is delivered to your customer’s door. Query handling can easily be resolved through one interface, delivering improved customer service.

3. Disconnected process journey not always suited to shared services

Different business functions may operate using independent systems and processes, with the O2C journey being dropped and reconnected separately. Unfortunately, this includes both manual and automated routes with finance teams taking responsibility for reconciling all the information, in different formats.

Therefore when considering moving O2C to shared services, understanding, and mapping the internal and customer journey with all touchpoints involved is vital.

This should not only include direct customer interactions but also systems, security, handover points, contract management, Service Level Agreements (SLA’s), and performance measures as these all have an impact on streamlining the end-to-end process.

Well researched and written SLAs are very important to the success of a shared services operation. They do not, and should not need to be huge documents with complex algorithms, but should be practical, easy to understand, and reviewed regularly.

4. Reporting and monitoring is hard

It’s difficult to monitor what you can’t see or understand. That’s why it’s so important to appreciate all processes and touchpoints, with one version of the truth being used across the organisation.

Siloed reporting can show a distorted view of the O2C process – for example stating that 98% of billing is accurate can be misleading as 30% of billing might be performed manually.

An O2C dashboard is a great way to visualise the journey and impact from various teams such as Customer Service, Finance Performance, Order Entry, Service Delivery, Billing, Dispute Management, Collections, Credit & Risk, and Cash Application can all feed into the data making it easy to demonstrate value to stakeholders.

Monitoring and adherence to targets and SLAs using data will also ensure you can drive real insight for decision-making purposes.

5. Cash isn’t ALWAYS King

‘Cash is king’ – is one of the most used phrases in O2C, however, it’s less common to see cash being a primary driver in strategic discussions at the C level.

Sales, Provisioning, Order Management, Billing, and Customer Services are all integral to collecting cash, but very few are incentivised or targeted on this.

Even some collections functions will reduce cash by removing disputed accounts or difficult to collect accounts from their performance metrics to avoid addressing the issues.

It’s important to work across functions to understand the varying priorities and identify the common areas to work on to achieve a cash focus – i.e. automation will enable sales to spend more time on selling and less time on non-revenue generating activities.

6. Systems can only be tailored so much

O2C is a basic expectation – not a high-value extra. Systems alone cannot be a ready-made solution that is switched on and just works without any effort. You will always have manual processes and many systems will need workarounds to meet goals.

The most important element to success is ensuring you are clear on business processes (manual and automated). Once these have been mapped out, you can implement solutions that support and complement those processes, ensuring you are exceeding customer expectations.

Conclusion

The Order-to-Cash (O2C) process forms the backbone of an organization’s order processing system. It encompasses various steps involved in receiving, processing, managing, and completing customer orders.

While optimizing the O2C process can enhance customer relationships and eliminate inefficiencies, it’s crucial to be aware of potential risks that may hinder its smooth execution.

Here are the five key risks to consider in the O2C process, enabling businesses to proactively address and mitigate them:

1. Order errors and inaccuracies
   

   Miscommunication, manual entry mistakes, or inadequate validation processes can lead to incorrect order fulfillment, delayed deliveries, and dissatisfied customers.

   
   
2. Credit and collection challenges
   

   Inadequate credit assessment, delayed collections, or failure to address credit risks can result in increased bad debt, cash flow disruptions, and strained customer relationships.

   
   
3. Inventory management issues
   

   Inefficient inventory management can cause stock outs or excess inventory, leading to missed sales opportunities, increased costs, and reduced profitability.

   
   
4. Order fulfillment and delivery challenges
   

   Production delays, supply chain disruptions, or inefficient logistics can result in missed delivery deadlines, increased costs, and damaged customer relationships.

   
   
5. Data security and privacy breaches
   

   Data security and privacy breaches can lead to financial losses, reputational damage, and legal implications when sensitive customer information and payment details are compromised.

   
   

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