An eBook curated with valuable input from
GPO of Billing, Credit,& Collections
Market Focal Point Manager,GBFS Canada, OTC
Director of Shared Services
Adopting an integrated platform is the right approach to overcome the challenges imposed by siloed solutions. Although cloud solves a lot of on-premise software issues, an integrated solution overcomes the hurdle imposed by combining cloud with ERP.
Moustapha Ould Ibn Mogdad OTC, Market Focal Point Manager
Bristol Myers Squibb
In recent years, several large enterprises have started moving away from federated SSCs, each with their own highly customized processes to a Global Business Service (GBS) model with more harmonized processes. However, this journey has been fairly difficult, and very few organizations have actually been able to pull this off successfully. The major reason is the complexity in their Order to Cash (O2C) process which turns out to be neither standardized nor interconnected. As per a recent BCG analysis in 2020, there are seven key processes and 27 sub-processes in an O2C function. These processes run in the background of several departments such as marketing, sales, pricing, contracting, collections, finance, and customer service. Because of this complexity, bringing harmonization within the internal processes becomes challenging. It often takes a crisis to shock them into realizing the problems and pitfalls of their inefficient O2C processes.
With business units spread all across the globe, it becomes even more difficult for Global Process Owners to keep track of every activity that’s happening. Irrespective of these challenges, finance leaders have started to realize that to be best-in-class, O2C must deliver results on two fronts simultaneously. On the one hand, it must have an agile process that helps deliver customer satisfaction by ensuring all orders get fulfilled correctly and buyers have a perfectly seamless experience. On the other hand, O2C must drive towards profit maximization and positive working capital while being cost-effective at the same time.
However, many current O2C processes have higher costs and points of potential delays because they entail several manual steps and lack global visibility. Moreover, most GBS organizations are no longer content with a collection of discrete processes in which data is available only at certain stages. They expect O2C to be transparent with data and performance visible in real-time, all the time. Customers have also come to expect real-time data and transparency. With all these expectations, the process cannot be harmonized without eliminating 3 crucial factors – siloed operations, lack of data, and inflexible on-premise legacy systems.
Traditionally, businesses solve their process issues by adopting standalone applications. This creates an environment of siloed operations at the department, data, and technology levels. Each department relies on an individual legacy system, having individual core responsibilities and functions, and not focusing on collaboration with other systems. Each department ends up having its own datasets which might differ from others in how they are collected and stored. This hinders the automation of processes and the adoption of technology. Overall, siloed operations lead to operational inefficiencies and affect the customer experience, thereby hindering business growth.
Separate ERPs for different lines of businesses pose a tough challenge for GPOs to consolidate their business processes. They end up having dedicated teams that extract data separately from each line of business. It becomes difficult to have control over the system and ends up needing tailor-made control policies for every system.
Below are some concerns associated with siloed operations:
Restricted data flow across different processes slows down the data up-gradation process. Therefore, finding the correct and updated information takes time and can result in erroneous reporting, especially when there are multiple instances of data transactions across systems. For example, sales data, customer details, or pricing information lead to incorrect billing/invoice when not updated regularly due to lack of integration. This takes a long time to be amended. Also, delays in the reconciliation of remittance data from banks against invoices might delay the collection process of contacting customers and getting the dues cleared.
O2C processes such as order processing, invoicing, expense approvals, and fulfillment include a lot of manual duplicate effort to avoid errors. Interconnected systems could leverage data from different stages of O2C for automated verification.
Reports highlighting performance across finance, sales, marketing, service, and fulfillment departments are needed regularly for making business decisions. In a siloed environment, analysts manually switch between different systems and applications to migrate all data into one report. Unavailability of real-time information might cause unnecessary dunning calls by collectors, hampering both customer relations and trust.
Investments in integrating, maintaining, upgrading, and acquiring new versions of existing applications lead to higher costs, with an added challenge of compatibility issues for IT teams. For the O2C process, siloed operations add to the existing costs in terms of deduction write-offs, late payments, compliance fees, and FTE productivity lost, thus reducing the overall profit margin.
It is difficult to view all customer data at once. This leads to slower customer issue resolution potentially resulting in a negative customer experience. For example, a customer service representative may have extended the payment deadline for a particular customer to support customer satisfaction goals. However, the collections team might not be aware of this modification and contact the customer to clear their dues, thus leading to a negative customer experience.
Tammy Lindorf, Director of Shared Services at Martin Marietta highlights that
previously they had to involve the IT team in generating reports from a siloed reporting tool. With the implementation of a reporting tool that sits over all of their databases, it has become easier to get data and mine data faster.
Traditional ERP systems are doing an excellent job at digitizing and storing information. However, according to Linda from Uber, accessing and analyzing data from ERPs requires manual effort. To provide monthly or biweekly reports of business performance on parameters such as expected payments or weekly processed payments, information has to be collected from individual systems and then analyzed; several processes need customization, which is a limitation for the ERP systems. Furthermore, customizing existing ERP systems to manage the workflow can lead to further investments. To tackle these issues, current ERP systems should be integrated with cloud solutions that require less funding, seamless connectivity, and accessibility across siloed processes to tackle these issues.
What are the Issues Faced by O2C SSCs with Soiled Operations?
Over the years, working dynamics have evolved. From physical proximity considered to be essential for running effective processes to achieving the same efficiency while working from home. And from running critical processes from highly secure physical brick-and-mortar sites to running them from any geographical location by adopting technology providing the same level of security.
Organizations should focus on building a virtual environment for the future, wherein businesses can be run from any location or system with no issues of data availability or accessibility and security. Automation should be a part of the core strategy to make processes agile, transparent, streamlined, and cost-effective. To enable this, running disparate ERP systems will not be an ideal approach. Organizations should integrate ERP systems with the cloud to facilitate global connectivity. Cloud adoption offers the following benefits:
The cloud offers better accessibility of information by making data available remotely. Also, data can be shared with additional users or accessibility can be revoked for existing users as required. With data available on the cloud, data reporting also becomes easy as it eliminates the effort required to source data from disparate systems. Also, data can be easily integrated with third-party applications in real-time to create recurring reports for business performance evaluation.
Cloud solutions require little or zero investment for software development or maintenance and require no specialized IT infrastructure or workforce. Better Maintenance, Faster Upgrading: Cloud solutions handle maintenance and up-grading seamlessly with operational scalability in communications, bandwidth, and hardware, etc. Furthermore, implementing cloud-based solutions can be eight times faster compared to traditional on-premises solutions. For instance, the implementation of a cloud-based cash application module can be accomplished in as short as 4 weeks, whereas upgrading ERP from one version to another can take up to two years.
Cloud solutions help to set up global policies for accounts receivable, credit, and collection operations. These solutions can automate manual
operations, ease bad debt, improve cash flow by reducing DSO and working capital, decrease deduction and dispute resolution time, and obtain higher recoveries. Moreover, they can incorporate multiple languages and currencies that enable operations globally.
Seamless data availability provides real-time information to customers such as real-time updates on shipments and payments. Furthermore, the ability to automatically transfer data in any format to any device or system, to share details on an order, shipping notice, tracking details, payment information, or remittance advice improves customers’ experience and empowers them with data insights to optimize order and payment processes. As highlighted above, the cloud allows smooth data integration across a distributed network where data is verified, validated, transformed, and transmitted according to the receiver’s requirements. Overall, the cloud provides a connected ecosystem where relevant users can share data as and when needed.
Stability and connectivity are the two main concerns while adopting cloud-based solutions, as different parts of the world have connectivity issues. Also, there might be scheduled maintenance for the ERP systems due to which there is downtime when the data is unavailable.
Linda Lei, GPO of Customer Payments, Deductions, and Credit
However, integrating individual processes into the cloud does not resolve the issue of siloed operations. It just adds another layer of complexity to the overall process. For example, with a cloud-based bolt-on for handling the credit management system, the remaining processes are left on on-premise ERPs or legacy systems. In this case, processes will still be running in a siloed environment with limited information across them. Furthermore, these setups might have stability and connectivity issues.
Benefits of Cloud Adoption: The cloud allows smooth data integration across a distributed network, where data is verified, validated, transformed, and transmitted according to the receiver’s requirements. It provides a cost-effective and low-maintenance solution that provides global connectivity and real-time access to data
But Is Cloud Strategy Sufficient? Integrating individual processes into the cloud does not resolve the issue of siloed operations. It just adds another layer of complexity to the overall process. A cloud-based platform strategy is needed to create a layer of a system of engagement that encompasses all IT systems
A cloud-based integrated platform is what’s needed to create a layer of a system of engagement to manage end-to-end O2C processes. A unified platform is placed above all the processes, ensuring a seamless exchange of information irrespective of geography, process, or business function. It also eliminates the hurdle of integrating ERP systems with cloud solutions. Furthermore, business leaders are keen to accept an integrated platform to improve workforce productivity, cost-effectiveness, and efficiency.
An O2C platform unites underlying functions to communicate with each other, optimizing O2C processes to provide faster processing and turn-around time. Integration and optimization of the O2C process can change the role of the SSC to business drivers. When the end-to-end process data is integrated, new insights are generated that can drive better customer service. For example, insights on new customers’ creditworthiness and changes in that of existing clients can help the business identify low-risk and high-risk customers and offer appropriate payment options.
Homer Smith, GPO of Billing, Credit, and Collections from Uber highlights that an integrated platform is an effective solution that acts as a top layer and works across the process to enable data normalization compared to migrating data from multiple ERPs to a single ERP.
To adopt a platform approach process integration, customer centricity, and shared responsibility across the process should be at the platform’s core. These must-have imperatives are explained below.
It is the key to overcome complexity in the O2C process. An O2C platform must be able to adapt to new technologies as new solutions become available. The platform should be able to synchronize data between disparate IT landscapes across processes. By integrating systems, data is made sharable and a hybrid platform is created on which the in-house and third-party applications run in sync. This will establish an ecosystem without boundaries that optimize process performance. For example, a leading industrial goods manufacturer used disparate ERP applications across countries. It migrated to a universal O2C platform that connected its CRM and mobile pricing system to its fulfillment, credit limit, and accounts receivable modules. As a result, it was able to minimize the number of orders that go into limbo, improve customer self-service, reduce inbound calls, lessen cycle time by 40%, and increase the speed at which the company recognizes revenues.
Customers expect real-time information on the process. A customer service executive who fails to provide order status or share payment receipts leaves a negative impression on customers. Hence, customer expectations should be kept at the core of the platform approach by blending the processes with technology. For example, a global pharmaceuticals manufacturer established a one-click portal to reorder products from the order history. The portal provides self-service ordering, real-time information on order status, delivery schedules, and payment requirements. It helped to increase the manufacturer’s customer satisfaction scores and reduced the need for manual service intervention to fulfil orders.
With several processes operating under a single platform it is crucial to assign process owners who will be the point of contact for any query, especially in case of a platform breakdown. For example, a global professional service firm appointed O2C process owners to optimize its fragmented O2C process. As a result, the proportion of faulty orders declined to less than 2%, and the flow-through of orders increased.
A unified platform-based O2C process helps GBS organizations with efficient resource utilization, process standardization, healthier cash flows, and process transparency. Key benefits of the unified O2C platform are:
Harmonized O2C function: To adapt to the next wave of digital GBS organizations, a harmonized process management approach is required and an O2C platform provides just that by being the single source of truth for everyone working within an organization. It helps in making the internal processes streamlined and enables superior and easy data visibility.
Increase in Sales Revenue: An O2C platform can help to increase sales revenue by 1% to 3% in a year. It helps in reducing blocked orders by validating orders based on dynamic order and credit policy and automatically adjusting the credit limit for a good paying customer, a customer with a history of payment defaults, and a new customer, instead of following a single threshold credit limit for all customers.
Cost-saving: A 15% to 30% savings in cost, owing to (a) automated order creation, (b) decrease in back-office efforts, (c) digital invoicing and cash application, (d) fewer disputes, and (e) fewer penalties for late or incomplete order fulfillment.
Reduced Days Sales Outstanding: Up to 30% shorter days sales outstanding resulting from low process lead times, less revenue locked up in collections, and gentle, proactive dunning.
Increased customer satisfaction resulting from a simplified order experience, real-time complaint resolution, few disputed invoices, and greater process transparency. For example, a sudden shift from being a regular paying customer to a defaulter may not need a strongly-worded reminder. Instead, a personal follow-up is required to understand the root cause as this might be due to a misunderstanding.
Increased employee satisfaction as work is less repetitive, involvement in strategic tasks, and reduced complexity in work.
An O2C platform facilitates all of the exchanges between relevant functions in buyer and seller organizations for every transaction. Every company needs to develop an O2C platform that unites the associated functions using tried-and-tested technologies and best-of-breed applications
Source: BCG 2020 Article,
Order to Cash Platforms are the Future
The next generation of O2C technology and platforms can deliver the extra velocity needed to gain an advantage. We have been scanning the market for platforms and technology that can change the game with O2C outcomes. Out of the solutions we’ve reviewed, the strongest came from providers that delivered data orchestration, automated insights and predictive analytics, and simple self-service functionality for customers to create frictionless processing
Source: Capgemini 2020 Article,
With many firms running a mélange of tech that merely resembles a stack — CRM, ERP, and eCommerce platforms all operating without genuine integration — they are not getting the benefits of a unified platform environment that has no silos to begin with.
Source: PYMNTS.com 2020 Article,
An Order-To-Cash Overhaul Is Coming For B2B Payments
The majority of GBS leaders are now shifting their gears and are trying to go beyond cost savings and deliver direct working capital impact. They are looking to constantly ensure equal quality standards across different business units, make changes, and gain buy-in across the enterprise. But with each business unit having its own set of processes and operating policies it becomes very difficult to get control over them. Thus, most leaders target harmonization as the way forward. However, due to the existing process silos created due to the use of on-premise ERP solutions, the flow of information is not as seamless as it should be. There are a variety of concerns that arise from this, some of which are a lack of up-to-date information, decreased employee productivity, lack of real-time visibility, high cost, and dissatisfied customers. To counter these difficulties, a lot of organizations have moved towards integrating their individual processes into the cloud. Although it provides global visibility and real-time access to data it does not resolve the issue of siloed operations. Rather it just adds another layer of complexity to the overall process. The ultimate solution to create a harmonized O2C function is an end-to-end cloud-based O2C platform.
An O2C platform overcomes concerns associated with traditional ERP or cloud systems, providing seamless integration across processes while enabling cross-functional collaboration and a single source for maintaining data security and integrity. The platform serves as a top layer above all the processes and systems, bridging the hurdles of data integration. It creates an interconnected environment by optimizing all O2C operations and allowing these processes to feed into core business decisions.
HighRadius is a Fintech enterprise Software-as-a-Service (SaaS) company which leverages Artificial Intelligence-based Autonomous Systems to help companies automate Accounts Receivable and Treasury processes. The HighRadius® Integrated Receivables platform reduces cycle times in your order-to-cash process through automation of receivables and payments processes across credit, electronic billing and payment processing, cash application, deductions, and collections. HighRadius® Treasury Management Applications help teams achieve touchless cash management, accurate cash forecasting and seamless bank reconciliation. Powered by the RivanaTM Artificial Intelligence Engine and FreedaTM Digital Assistant for order-to-cash teams, HighRadius enables teams to leverage machine learning to predict future outcomes and automate routine labor-intensive tasks. The radiusOneTM B2B payment network allows suppliers to digitally connect with buyers, closing the loop from supplier receivable processes to buyer payable processes.
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