Today, most global business services (GBS) leaders are working with their teams towards meeting the CFO’s goals of safeguarding cash flow and optimizing working capital. The task becomes significantly harder when GBS models operate in silos.
The major reason for these silos is the lack of a centralized system across diverse business units. Decentralization of these global units also leads to challenges like:
GBS teams working with decentralized systems across different locations cannot collaborate with other teams to evaluate the root cause, resulting in a poor customer experience in the long run.
A/R teams in most GBS models are involved in manual and transactional tasks, which prevents them from taking up roles that require strategic decision-making skills. Hence, most GPOs are forced to rethink their SLAs (service level agreements) because their A/R teams cannot deliver the desired objectives on time. This results in a negative impact on working capital.
Every GPO’s goal is global expansion to thrive in their industry. But the price of expansion is that they must deal with competition in the market. Some GBS leaders believe that staying local will help them avoid competition, but they are continuously tasked with leveling up to be at par with their peers.
It is significantly more challenging if they continue to operate on a legacy platform/For example – legacy-based ERP applications when their peers have invested in advanced automation capabilities.
To stand out from the competition in the industry, every GBS organization must try to deploy innovative operational models for their operations successfully.
But it is often challenging for these leaders to implement such models. One of the primary reasons is that most finance executives are doubtful about the success of the operational model, and getting their buy-in is comparatively quite difficult.
The above challenges point to the lack of end-to-end visibility in GBS models. GBS leaders need to look for ways to implement a more harmonious mode of operation to meet the CFO’s objectives.
Visibility is a key metric that distinguishes a best-in-class O2C process from the rest. Poor visibility can often lead to errors, information silos, and delays in cash conversion.
For instance, teams like credit and sales that crave robust communication and regular data exchange will most likely make less accurate decisions without centralized visibility.
Decision-makers such as CFOs/CXOs constantly seek visibility across key A/R performance metrics like day sales outstanding (DSO) to generate actionable insights for the core business.
Homer Smith from Uber highlights –
Tammy Lindorf from Martin Marietta highlights –
Moustapha Ould Ibn Mogdad from Bristol-Myers Squibb (BMS) highlights –
Customers form the front and center of every A/R operation, and every GBS model is executed with this into consideration. There are three main reasons why GBS teams should adopt 360-degree visibility into customer behavior trends:
Based on insights collected from GBS leaders, we have identified five critical areas in A/R shared services that can greatly benefit from enhanced visibility:
Centralized automated systems with better visibility ensures reduction in operational silos by consolidating all the relevant information on a single platform. As a result, different teams can have access to the latest data about the customers.
With enhanced visibility into receivables performance, it becomes possible for teams to make decisions that impact cash flow and help optimize working capital.
In O2C, almost one-fourth of the effort and time goes into resolving disputes that could be easily avoided with better visibility. Reduced cycle time is one of the most sought-after parameters to measure the success of A/R processes.
Real-time visibility ensures that A/R processes are consistent, streamlined, and compliant to reduce process-wide variance and associated risks.
End-to-end visibility from an automated system also provides consolidated insights from relevant data. This enables A/R teams to make more informed decisions. Some examples include:
This is how better visibility across receivables ensures significant business value for GBS models to drive success on multiple fronts.
GPO of Customer Payments,
Deductions, and Credit
Linda believes that ERP is at the core of the tech stack. It is required to integrate all the data processed across systems and transfer them back to the ERP system. It is essential to integrate ERP with an automated solution to manage workflows. Uber uses an in-house order management system, along with outsourced ERP systems. In addition, they also have integrated an AI-powered automated system to optimize their global A/R operations.
Thus, information pulled from the order management systems by the ERP is shared with third-party systems. For example, aging data is pulled from the ERP and shared with third-party systems to monitor the credit-risk levels and manage cash application and collections. This type of integration also helps Uber have a 360-degree view of the customer.
Managing data across a legacy ERP platform is a cumbersome task – add to that the processing of large volumes of data and it turns into a nightmare for the A/R team. Uber leverages a third-party automated solution to drive efficiency and manage the volume of data for business units that have larger A/R. Several parameters need to be analyzed and customized to provide business insights for reporting data, and the information is synchronized with its in-house or a centralized system.
Despite a clear understanding of the significance of global visibility, several large organizations run accounts receivable, accounts payables, and inventory in silos. This is due to disparate IT systems, lack of integrated tools, or M&A complexities.
While it is not easy for businesses to achieve end-to-end visibility in one go, it is possible to gradually improve the extent of visibility by considering the following when building the tech stack:
Dashboard is the one of the most important requirements in a technology stack to enable global visibility and easy decision-making.
GPO of Billing, Credit, and Collection
The above eBook was an extract from an extensive thought leadership Whitepaper titled:
What You’ll Learn From this Whitepaper:
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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.