According to a PWC report, improved working capital management can unlock a total of 1.2 trillion Euro or USD 1.4 trillion, increasing the Return on Invested Capital (ROIC) by 8.8%.
At the heart of every business, there is working capital or cash. Every payment received is like a heartbeat—a flow of cash pumped into the system which is then distributed through different channels across the organization to keep operations up and running. Which means a delayed cash payment, or an incomplete payment is like a missed heartbeat. And too many missed heartbeats can lead to an emergency.
That is how important working capital is to the survival of a business. In fact, it is one of the key constituents behind smooth financial operations. When a business optimizes its working capital, it opens new avenues for profitability and operational success. It also improves customer relationships, leading to higher customer retention. No wonder CFOs have a sweet spot for working capital optimization.
With the changing business landscape and customer expectations, the Order to Cash (often termed O2C or OTC) cycle—a key lever of working capital—becomes more difficult to manage and, in the process, often gets overlooked. As an integration point between two leading components of a business—finance and sales—O2C involves several departments and stakeholders. This system dependency coupled with the lack of an integrated platform reduces visibility across the process, leading to data silos.
Today, a majority of business organizations are struggling with a massive amount of transaction data that is available but not being leveraged to derive valuable insights. In a time when considerable efforts go into collecting payments from timely customers or resolving payment-related disputes, organizations are hard pressed to utilize the data and optimize their O2C process. Failing which, organizations are forced to spend a large chunk of their account budgets to manage the process end-to-end as otherwise unmanaged O2C can leave a heavy dent in their revenue earnings.
|Zero visibility||Undefined scope of improvement|
|Data extraction & normalization||Anomaly identification|
|Dissatisfied customers||Revenue loss|
In order to eliminate data silos and transform the O2C process, organizations are increasingly recognizing the role of data and analytics as well as hyperautomation in optimizing this interconnected process that starts with a customer placing an order and ends when the payment is received. In a recent survey, APQC has found that 65% of surveyed organizations are currently transforming their O2C process while 15% have already achieved transformation.
The survey has also found that 74% organizations surveyed are leveraging automation or other digitization technologies as part of their transformation process. Let’s take a look at how data, analytics and hyperautomation can help address the key challenges and complexities of a traditional O2C process.
A data-driven approach to transform O2C using data and analytics
Step 1: Data collection
As discussed above, every year, businesses generate a massive amount of transaction data from a variety of sources. This data, if unstructured, prevents businesses from deriving any valuable insights. In order to unclog this bottleneck and pave the way for the unification of data, data engineers deploy the Extract, Transform and Load (ETL) process. ETL collects data from diverse proprietary sources and unifies it into a consistent, analytics-ready, structured format. That constitutes the very first step towards deriving insights through reports and dashboards created from the aggregated data.
Step 2: Data ingestion
The next step is data ingestion in which the data aggregated from the overall O2C process goes through exploratory data analysis, followed by cleaning and flattening. This refined data is now ready for the next step – process discovery. This automated, data-driven artificial intelligence (AI) system helps discover, map and document work processes in near real-time leading to faster identification of points of friction across the O2C process.
Step 3: Process automation
Organizations are also leveraging hyperautomation and Robotic Process Automation (RPA) and solutions to automate and streamline their O2C process and achieve intelligent automated decision-making. When process mining, process analytics, hyperautomation is combined with RPA, it translates into higher efficiency, customer rendition, and cost savings. When coupled with the right advanced analytics tools, it also empowers the leadership team by providing relevant information and real-time insights, enabling leaders to take proactive actions.
Step 4: Measuring impact
These latest process analytics capabilities also help businesses measure the performance of the transformed process and identify the scope for improvement in order to drive the organization towards developing a smarter and more effective O2C system.
Recently, Cloud4C helped an Asian IT conglomerate dealing in IT, ITeS, public cloud, and data centers improve their O2C process by undertaking a holistic data-driven approach that resulted in enhanced cashflow, process improvement, stronger compliance, and a future-ready system. With our proven process analytics and hyperautomation expertise, we not only helped the IT
conglomerate achieve end-to-end process transformation but also impacted every facet of their business, opening new doors of profitability.
In this rapidly evolving business landscape, organizations must transform their Order to Cash(O2C) processes into a smart one that ensures smooth data flow at every touchpoint, end-to-end visibility, and advanced insights for real-time decision making. A fully integrated system is the key to becoming a leader in O2C. By transforming their O2C, businesses not only optimize their working capital or increase profitability but also reduce Days Sales Outstanding (DSO), improve service levels and auto cash posting. This is the time to move away from a manual, inefficient O2C cycle and create a game-changing system that is intelligent, automated and helps deliver historical and positive impacts
Contact us if you are looking to transform your Order to Cash process. On the eve of process improvement month, avail free consultation with our Hyperautomation experts to know how much you can benefit from Process mining and Process Analytics.