Mark Harrison, Founder & CEO, Callisto Grand
Sam Dhingra, Director Solution Engineering, HighRadius
Buying and Implementing Technology for Treasury Professionals
As per BCG (analysis in 202016), there are seven key processes and 27 sub-processes in an O2C process. These processes run in the background of several departments such as marketing, sales, pricing, contracting, collections, finance, and customer service. Businesses expect O2C processes to deliver customer satisfaction and bring about cost-efficiency. However, the current state of the O2C process entails several manual steps on account of information stored across siloed systems. This increases the processing time of the information.
responsibilities and functions, and do not focus on collaboration with other systems. Each department ends up having its own datasets, which might differ from others on how they are collected and stored, which hinders automation of processes and adoption of technology. Overall, siloed operations lead to operational inefficiencies, affect the customer experience, thereby hindering the business growth.
Separate ERPs for different lines of businesses becomes challenging for GPOs to consolidate their reporting. They end up having dedicated teams that extract data separately from each line of business. Furthermore, it becomes difficult to have control over the system. It ends up having a tailor-made control for every system.
Below are some concerns associated with siloed operations:
Critical data such as sales data, customer details, or pricing information, when not updated regularly due to lack of integration, lead to incorrect billing/invoice, which takes a long time for amendment. Further, delay 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, the workforce manually switches 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 relation 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 the IT team. For the O2C process, siloed operations add up to the existing costs in terms of deduction write-offs, late payments, compliance fee, and FTE productivity lost, thus reducing the overall profit margin.
It is difficult to view all customer data in one place and accurately assess the experience and satisfaction level, leading to slower customer issue resolution and might result 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 from Martin Marietta highlights that 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 their databases, it has been easier to get data and mine data faster.
Traditional ERP systems are doing an excellent job at digitizing and storing information. According to Linda from Uber, accessing and analyzing information from ERPs require 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. Further, 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.
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. 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.
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:
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 easier as it eliminates the efforts required to source the 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 Upgradation: Cloud solutions handle maintenance and up-gradation seamlessly with operational scalability in communications, bandwidth, hardware, etc. Further, installing cloud-based solutions can be eight times faster as compared to traditional on-premises solutions. For example, installing a cloud-based cash application can be accomplished in three months, 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, lessen 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 transfer data automatically 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 and insights to optimize order and payment processes. Overall, the cloud provides a connected ecosystem where relevant users can share data 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, having a cloud-based bolt-on for handling credit management system but the remaining processes are left on on-premise ERPs or legacy systems. In this case, processes will be still running in a siloed environment with limited exchange of information across processes. Further, these setups might have stability and connectivity issues.
A cloud-based integrated platform is needed to create a layer of system of engagement for managing end-to-end O2C processes. A unified platform is placed above all the processes which ensure 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 also keen to accept an integrated platform to improve workforce productivity, cost-effectiveness, and efficiency.
“Adopting integrated platform is the right approach to overcome the challenges imposed by siloed solutions. The integrated solution overcomes the hurdle imposed by combining cloud with ERP.”
Moustapha Ould Ibn Mogdad OTC, Market Focal Point Manager
Bristol Myers Squibb
An O2C platform unites underlying functions to communicate with each other, which optimizes 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 as when the end-to-end process data is integrated and new insights are generated, which can drive better customer service. For example, insights on the creditworthiness of new customers and changes in that of the existing clients can help the business to identify low-risk and high-risk customers and offer appropriate payment options. Homer 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, as 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 core of the platform. 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 with technological solutions 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, and 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 fulfill orders Shared Responsibility: With several processes operating under a single platform, it is important 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.
With several processes operating under a single platform, it is important 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 SSCs with efficient resource utilization, healthier cashflows, and process transparency. Key benefits of the unified O2C platform are:
Increase in Sales Revenue: O2C platform can help to increase sales revenue by 1% to 3% increase in a year. It helps in reducing block 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 the customers.
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.
Up to 30% shorter days sales outstanding resulting from lower process lead times, less revenue locked up in collections, and gentle, proactive dunning.
resulting from a simplified order experience, real-time complaint resolution, fewer 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.
as work is less repetitive, involvement in strategic tasks, and reduced complexity in work.
Cargill, a global food corporation with operations in 70 countries, wanted to streamline its O2C process due to existing inefficiencies, including limited DSO opportunities, the variability of bad-debt reserves, and high-cost execution. Cargill lacked a standardized O2C process across its business verticals, due to which it was facing the following issues:
Cargill faced multiple challenges because of this disparate IT landscape, including, but not limited to, the lack of visibility across processes, absence of reliable data for reporting, less control over A/R outcomes, and limited data insight on customer payment behavior. Cargill wanted to centralize and integrate its entire O2C system to ensure end-to-end visibility in credit risk. With multiple business units and ERP instances, Cargill struggled to reduce cost as it worked to improve process efficiency and customer satisfaction. The core challenges for the company were limited visibility across the AR process and moving to a single, global integrated platform for managing the receivables across processes. Challenges faced by Cargill in the credit-to-cash process were:
Followed non-standardized credit policy enforcement and scattered risk mitigation strategies such as:
Followed account prioritization and customer outreach approach that was not backed by data
Cargill deployed a solution that integrated receivables from multiple ERPs, maintained a consistent flow of data in the form of a unified dataset, enabled process standardization and data communication across different BUs, and tracked performance on defined parameters. To overcome business challenges, Cargill implemented a series of third-party ERP accelerators, which enhanced the functionality of the existing ERPs through full integration. Some solutions and their advantages are:
A single integrated cloud platform overcomes all of the 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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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.