Order-to-cash GBS leaders today are pushed to outperform with whatever resources they have. On the one hand, this has enabled them to become more adaptive and spontaneous but on the other, it has brought several pressure points under the spotlight, which influences how A/R business decisions are made.
This ebook highlights those seven different areas vexing GPOs today and provides tips and strategies to enable GBS leaders to become value-drivers by adopting an agile and flexible approach for the next quarter.
Most global businesses operating under a typical global business services model tend to prioritize cost reduction over customer satisfaction. The optimal way to avoid that from happening would be to drive a more customer-centric approach. But the factors that inhibit GPO’s from achieving customer satisfaction within order-to-cash are two-fold:
There is a general notion that maintaining customer relationships is the sales team’s job. Hence, A/R teams deprioritize it, as it doesn’t directly fall under their KPI.
A/R teams working in silos with disintegrated systems, often across geographies, are unable to interact and work together in real-time, resulting in poor customer experience in the long run.
To enhance the future role of GBS towards stronger value and customer focus, a more sophisticated and advanced service offering is key: 86% of all respondents rated this topic as highly relevant in the future, but only 21% feel confident about their own offering and capabilities today.
Another major pressure point that emerged as an underlying impact of the pandemic was that shared services were unable to deliver on the Service Level Agreement(SLA). As per SSON, almost 43% of the GBS professionals claimed inadequate infrastructure and limited hardware as their reason for failure to deliver during this crisis. As a result of this, some GPOs were forced to rethink their SLAs since it affected their receivables and overall productivity. Few of them even started moving to third-party service providers value drivers and investing in digital transformation initiatives to comply with the needs of the customers and support their crumbling working capital and cash flow.
Enterprise organizations today have a vision for global expansion – they’re venturing into new territories and even new industries and new business lines. And with every expansion, order-to-cash GPOs are faced with great opportunities and even greater challenges. The price of expansion is that you have to deal with the competition in the market. This then backfires as another area of stress for finance professionals. Some leaders believe that staying local might help them avoid competition, which is not true. This is because GBS is continuously tasked with the need to level-up in order to be on par with their peers. It is significantly more challenging if you’re operating on a legacy platform when these competitors have employed new, more innovative models that might involve technology investment and automation.
Increased competition, economic uncertainty, and globalization are among the forces that are driving companies to seek to reduce the cost and improve the effectiveness of their G&A functions. In our view, companies can greatly enhance their pursuit of these goals by thoughtfully managing their service delivery organizations according to leading marketplace practices.
For every GBS model to thrive, it is imperative that leaders keep coming up with innovative models of operation for their A/R processes that set them apart from their peers. But often, it is challenging for leaders to implement new, disruptive models for their order-to-cash operations. One of the primary reasons being that most of the finance executives are skeptical about the success of the said operational model. It is harder for GPOs to create an effective business case and get the executive’s buy-in considering the cost, benefit and execution pre-requisites of digital transformation projects. investment and automation.
Among the operating models used for GBS, 54% comprised Regional centers (SSO located in regions),31% Hub and Spoke (One global SSO with additional regional centers), and 14% Decentralized (SSO located within countries).
Operational agility is the rate at which the workforce adapts to change- the faster the workforce adapts, the smoother the business flows. This results in improved workforce productivity and optimized working capital.
But managing this rate is significantly difficult if there is a resentment for change in your team. The factor that might lead to this aversion is that the order-to-cash teams are not that well versed with the functional aspect of the technology and automation and they look at it as a replacement for them instead of an enabler or value-driver.
In addition, many companies have not yet adopted agile ways of working, even though the advantages are clear (agile organizations are one and a half times more likely to report better financial performance relative to their peers, according to McKinsey.
A major area of concern for GBS leaders is the number of employees who are leaving their positions in search of something more “secure” in this turbulent time. This leads to an increase in employee attrition rates, which affects the overall team productivity.
But some GPOs face a significant challenge to provide incentives with fractured cash flow and working capital. It is even difficult for them to keep their order-to-cash teams engaged and motivated, due to all the manual work they put in. This is also one of the reasons why employees decide to be in a team that already leverages technology in the workplace.
More and more service delivery organizations are allowing employees to work from home or other locations outside the office, and such flexible work arrangements can yield dramatic cost savings.
More than 50% of GBS leaders are concerned about continued global business delivery operations, as per SSON. To cut down on additional operational costs of running shared services and ensure an optimized working capital, GPOs are tasked with the dilemma of making these critical decisions for their business-
One of the most optimal solutions to tackle these pressures that GPOs are dealing with is implementing digital transformation in the workplace. By investing in digital transformation initiatives in order-to-cash, GBS leaders could elevate themselves to a more strategic role in the office of a CFO.
More than 37% of GPOs are planning on accelerating their digital transformation initiatives.
According to Forbes, 84% of digital transformation projects end up as a failure- primarily because of a one-directional approach to drive this transformation, and not focusing on all the 3 levers of digital transformation at once. Order-to-cash GPOs exploring digital transformation initiatives right now cannot afford to make a wrong decision. You can go through this webinar to hear experts from HighRadius talk about how you can leverage this Gartner cost decision framework to enable better decisions for your digital transformation strategy.
The three levers of digital transformation- People, Process, and Technology are similar to the legs of a three-legged stool. They’re codependent on each other and even if one breaks down, the stool would fall.
Here are three ways as to how automation in A/R could impact the three main drivers of every business in the future:
The challenge for GPOs in this area is to get the A/R teams to embrace automation to perform tactical tasks, allowing them to shift their focus on to more high-impact tasks like performing credit reviews and making well-informed, data-backed decisions. For that to happen, GBS leaders would need to ensure that the teams are able to accept and co-exist in the same ecosystem as technology.
1.1 Explain to the team about automation-
Help the team understand how automation trims down the paper and labor-intensive A/R operations, enabling them to take up more strategic tasks. And assure them that automation doesn’t act as a replacement but instead as an enabler and value-driver.
1.2 Prepare them to ease their way through the change-
Conduct workshops and train your team to ensure that they completely understand and adapt to how the A/R processes around them would transform.
1.3 Boost your team’s morale-
Just making your team familiar with the change isn’t enough- you need to keep them engaged and motivated
The roadblock that GPOs face here is to identify process gaps in the A/R operations and look for a scope of improvement in them. An ideal way to clear these blocks would be to devote time to executing process improvement strategies.
2.1 Perform Fit-Gap analysis-
Focus on the leaks and pain points in the A/R process to think through how your expectations from a digital transformation initiative would look like.
2.2 Apply lean six sigma and kaizen-
Implement agile methodologies to strategize on how to achieve desired outcomes from automation and evaluate how the new system is delivering in comparison to the legacy one.
Technology investment is the most crucial aspect of any business, hence GPOs need to ensure that they invest in the right piece of technology and get the stakeholder buy-in to achieve the finance executives’ goals.
In order to do that, it is necessary to stay updated with the evolving market trends. Here are a few trends that global business services are working towards:
3.1 Shifting to a cloud-based automation system-
Acts as a single source of truth, keeping together all the customer master data consolidated in one place, allowing inter-team collaboration due to real-time visibility. That, in turn, helps streamline workflows and reduces the time spent on getting approvals from different stakeholders.
3.2 Installing self-service portals to digitally enable the customers-
It would act as a gateway that allows both the customers as well as the employees to view invoices, make payments, view outstanding disputes, etc. It would also reduce the number of touchpoints a user would have to go through earlier to resolve an issue.
3.3 Investing in AI-enabled digital assistants for A/R-
Artificial intelligence-powered assistants help improve user experience by organizing an A/R analyst’s worklist and arranging action items based on priority levels while also suggesting where to start the day.
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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