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The Hackett Group:
15 Recommended Metrics to Evaluate Order To Cash Processes

How does this ebook help me?

This eBook contains The Hackett Group’s top 15 Order to Cash success metrics benchmarked against the results achieved by world-class GBS organizations. Considering ‘efficiency’ and ‘effectiveness,’ each performance indicator is described through the best practices of top-performing companies along with the outcomes they drive.

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Key Takeaways

Learn what it means to be a world-class A/R for GBS organizations
Benchmark against world-class GBS A/R performance results using these 15 metrics
Understand the best practices followed by top-performing GBS A/R to stay ahead of the curve
Get a sneak-peek on how HighRadius dotONE helps O2C functions improve by benchmarking against industry peers

Table of Contents

01.
Credit Management Metrics
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02.
Billing & Payments Metrics
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03.
Cash Application Metrics
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04.
Deductions Management Metrics
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05.
Collections Management Metrics
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06.
Order to Cash Metrics
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07.
HighRadius dotONE Performance: Driving a High-Performance Culture by Benchmarking KPIs against Industry Peers
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08.
What Drives World-Class A/R Performance for a GBS organization?
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Chapter 01

Credit Management Metrics


1. Average Days it Takes to Complete New Credit Reviews

EFFICIENCY METRIC
Average Days it Takes to Complete New Credit Reviews

Best Practices from World-Class GBS Organizations:

  • Implementation of best-of-breed online credit applications
  • Automating correspondence for missing information such as bank/trade references, and backups
  • Providing real-time tracking of application statuses

Benefits:

  • Improved customer experience with greater visibility
  • Reduced manual errors

2. Automated Versus Manual Credit Modeling Tools

EFFICIENCY METRIC
Automated Versus Manual Credit Modeling Tools

Best Practices from World-Class GBS Organizations:

  • Automating stakeholder correspondence for all credit decisions
  • Integrating services with country-specific and industry-specific credit agencies, public financials, and insurance bureaus
  • Automating the capture of fields from the credit application form

Benefits:

  • A standardized credit operation across various platforms
  • Improved productivity with high-value customers
Chapter 02

Billing & Payments Metrics


3. Percentage of Invoices Generated & Distributed Electronically

EFFICIENCY METRIC
Percentage of Invoices Generated & Distributed Electronically

Best Practices from World-Class GBS Organizations:

  • Adopting an automated e-invoicing portal
  • Delivering invoices according to customer-preferred channels such as portals and e-mail
  • Tracking of customer conversions from paper to e-invoice

Benefits:

  • Self-service customer portals save print + mail costs
  • The elimination of low-value tasks in billing and invoicing such as dealing with paper and interacting with customers

4. Average Time It Takes to Bill

EFFICIENCY METRIC
Average Time It Takes to Bill

Best Practices from World-Class GBS Organizations:

  • Creating a self-service customer portal for viewing invoices
  • Introducing a single portal that includes all relevant backup documents such as Proof of Delivery (PODs), Bill of Lading (BOLs).
  • Streamlining collaboration between internal teams

Benefits:

  • Lowered payment cycles
  • Improved customer experience

5. Percentage of Invoices Corrected for Billing Errors

EFFICIENCY METRIC
Percentage of Invoices Corrected for Billing Errors

Best Practices from World-Class GBS Organizations:

  • Introducing an automated invoice generation from ERP open invoices
  • Developing correspondence templates and packages with auto-attached documents

Benefits:

  • Lowered deductions
  • Faster collections
  • Better customer experience

6. Percentage of Customers Who Access Accounts via Web-based Application

EFFICIENCY METRIC
Percentage of Customers Who Access Accounts via Web-based Application

Best Practices from World-Class GBS Organizations:

  • Invoicing customers electronically via emails, portals
  • Allowing customers to pay in electronic payment formats (ACH, Credit cards and e-Checks) through payment portal
  • Offering incentives to customers to bring them onto Web-based portals

Benefits:

  • Faster payments
  • An improved e-adoption
  • A much better customer experience overall
Chapter 03

Cash Application Metrics


7. Process Cost per Customer Remittance

EFFICIENCY METRIC
Process Cost per Customer Remittance

Best Practices from World-Class GBS Organizations:

  • Standardizing processing for different e-remittance types
  • Automating aggregation of remittances from portals, e-mails, and EDI

Benefits:

  • Easier e-adoption in payments
  • Processing payments at lower costs

8. Automatic Remittance Posting Matching Rate

EFFICIENCY METRIC
Automatic Remittance Posting Matching Rate

Best Practices from World-Class GBS Organizations:

  • Template-agnostic remittance capture
  • Aggregating the remittances from multiple sources (mails, EDI, web-portals)
  • AI-enabled payment matching & exception handling

Benefits:

  • Reallocated users
  • Reduced costs
Chapter 04

Deductions Management Metrics


9. Average Dispute Resolution Cycle Time

EFFICIENCY METRIC
Average Dispute Resolution Cycle Time

Best Practices from World-Class GBS Organizations:

  • Identifying deductions at Cash Application
  • Creating a single repository for all backup documents such as notes and claims across internal and external teams
  • Tracking aging deductions

Benefits:

  • Improved recovery of invalid deductions
  • Better adherence to big box retailers such as Walmart

10. Percentage of Disputes that are not Resolved by the Initial Resolver & Needs to be Escalated Within the Management Team

EFFICIENCY METRIC
Percentage of Disputes that are not Resolved by the Initial Resolver

Best Practices from World-Class GBS Organizations:

  • Providing visibility of resolution status and dispute progression
  • Collaborating seamlessly between internal teams
  • Easing the research process by having all documents in one place

Benefits:

  • Lowers Days Deductions Outstanding (DDO)
  • Reduced costs
Chapter 05

Collections Management Metrics


11. Process Cost per Collection Contact

EFFICIENCY METRIC
Process Cost per Collection Contact

Best Practices from World-Class GBS Organizations:

  • Providing a prioritized worklist for collectors
  • Adopting automatic correspondence approaches versus dial for dollar approaches
  • Having a single source of truth across various platforms to access backup documents such as invoices copies and claims documents

Benefits:

  • A scalable collections’ operation
  • Outreach to a broader customer base

12. Collection Contacts per FTE

EFFICIENCY METRIC
Collection Contacts per FTE

Best Practices from World-Class GBS Organizations:

  • Inbuilt correspondence templates and packages with auto-attached backup documents to save time
  • Sending proactive reminder to customer before the payment due date
  • Automated correspondence to different customer buckets

Benefits:

  • Phone calls limited to only select high-risk customers
  • Reduced aging/ past dues

13. Average Days Delinquent

EFFICIENCY METRIC
Average Days Delinquent

Best Practices from World-Class GBS Organizations:

  • Sending automated proactive reminders before payment due date
  • Predicting when a customer is about to pay using Artificial Intelligence
  • Providing customers with a self-service portal for viewing invoices and making payments

Benefits:

  • Improved working capital
  • Reduced dependence on banks for short-term banking

14. Percentage of Credit Sales Collected Within Terms

EFFICIENCY METRIC
Percentage of Credit Sales Collected Within Terms

Best Practices from World-Class GBS Organizations:

  • Providing incentives for early payments
  • Enabling payment features such as auto-pay, schedule pay, etc

Benefits:

  • Improved Days Sales Outstanding (DSO)
  • Fewer missed payments
Chapter 06

Order to Cash Metrics


15. Process Cost as Percent of Revenue

EFFICIENCY METRIC
Process Cost as Percent of Revenue

Best Practices from World-Class GBS Organizations:

  • Ensuring high employee productivity by eliminating manual error-prone tasks
  • E-adoption from paper
  • Keeping track of high-risk customers to ensure there is minimal bad debt and write-off

Benefits:

  • Improved working capital and cash flow
  • Easier cash management
Chapter 07

HighRadius dotONE Performance: Driving a High-Performance Culture by Benchmarking KPIs against Industry Peers


HighRadius dotONE Performance

At HighRadius, we have constructed a proprietary Value Realization Framework that connects each functional product based on Integrated Receivables. The platform uses Key Performance Indicators (leading indicators) that you can start measuring from Day One.

Since each KPI is tied to a Business Value Metric (lagging indicator) such as DSO, Bad-Debt, or Average Days Delinquent, finance leaders and their teams can measure and benchmark KPIs against best-in-class industry trends.

In addition to this, from a unified dashboard, teams can now focus on improving leading indicators. Your Business Value Metrics can finally move in the right direction!

Achieve best-in-class Order to Cash KPIs and build a high-performance culture with HighRadius dotOne Performance.

Chapter 08

What Drives World-Class A/R Performance for a GBS organization?


What should your digital transformation initiative focus on?

All businesses who need to move with the times should plan an immediate digital transformation. It is needed today more than ever before.

While the transformation process will undoubtedly cause a temporary disruption, finance execs should consider the positive impact of heavy investment in the following areas immediately:

Automation of repetitive clerical tasks across C2C
Core automation means that costs are low, and effort is allocated to the right
tasks

A single, integrated platform
More effective in delivering services to internal and external stakeholders

AI-driven automation technology
Low-error rates in tasks

Integrated reporting and analytics
Better decision making and insights

Using big data and machine learning
Improved outcomes of A/R actions – meaning faster, more effective collections

Sanofi, Cargill and Danone Drives World-Class A/R Performance with Digital Transformation

Final Thoughts

True digital transformation can only be achieved when there is a cross-company culture embracing digital processes in every department. While this is a scary thought for many organizations, real game-changing benefits can be gained by automating end-to-end processes in just one department: Accounts Receivable.

Strategic investment here can play a major role in helping peer-group organizations catch up to their world-class competitors while enhancing stakeholder’s perceptions of how finance adds value to the performance of the enterprise.

There's no time like the present

Get a Demo of Integrated Receivables Platform for Your Business

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HighRadius Integrated Receivables Software Platform is the world's only end-to-end accounts receivable software platform to lower DSO and bad-debt, automate cash posting, speed-up collections, and dispute resolution, and improve team productivity. It leverages RivanaTM Artificial Intelligence for Accounts Receivable to convert receivables faster and more effectively by using machine learning for accurate decision making across both credit and receivable processes and also enables suppliers to digitally connect with buyers via the radiusOneTM network, closing the loop from the supplier accounts receivable process to the buyer accounts payable process. Integrated Receivables have been divided into 6 distinct applications: Credit Software, EIPP Software, Cash Application Software, Deductions Software, Collections Software, and ERP Payment Gateway - covering the entire gamut of credit-to-cash.