STOP COUNTING THE PENNIES (YOURSELF): WHY NOW IS THE TIME TO DIGITISE ORDER-TO-CASH PROCESSES

By Thomas Dobis, DXC’s BPS Global Advisory Finance and Accounting (F&A) lead

 

Improved efficiency and cycle times on order-to-cash (OTC) processes are key issues for finance managers across the world. As organisations increasingly digitise systems and update processes, finance departments are looking to do the same. Some businesses will choose to undertake system updates, adding third-party bolt-ons wherever they can, others might choose to start from scratch with new digital platforms that incorporate new automation processes. This can be daunting, but there are some common starting points.

Many organisations will use enterprise resource planning (ERP) platforms to process and manage the majority of transactions in their finance ecosystems, such as accounts receivable, credit, payables, statement preparation, and others. Often ERPs have been incrementally updated, or have offered supplementary tools, to support new digital formats and produce better results. These retooled platforms are delivering results and offer companies a standardised platform to manage not only finance transactions, but also similar activities in other domains where administration of transactions is important. While these platforms have become more flexible, they can be time-consuming to configure or re-configure because they are often multi-dimensional.

In addition, OTC is customer sensitive – it can have important impacts on customer satisfaction and therefore future relationships. Using the standard functionality of an ERP system is not possible when managing line-item or customer invoice information, where there may be thousands of transactions a month that need to be processed and converted digitally. Bolt-ons frequently take too much time to configure and require too much data transferring and reconciliation to maintain. Thankfully there is another way.

 

Modernisation to automation

Let’s face it, no one likes replacing functional systems that are core to their business operations. But the lure of technologies such as digitisation, robotic process automation (RPA), machine learning, artificial intelligence (AI), and digital agents or chatbots, as well as newly designed workflow tools/case management tools, promise to improve efficiency and cycle times, and lower costs more quickly than reconfigured ERPs and bolt-ons.

However, upgrading entire IT ecosystems and adopting new tools has proven a challenge. As companies experiment with new tools, they often struggle to execute integration with existing platforms and tools. The challenge is how to leverage the power of digitisation and automation to achieve optimum benefits. This is not necessarily easy, especially as various generations of systems will need to be configured and reconfigured in a smart way, so they all work together efficiently.

Just as processing power needs to be sorted out, companies will also need to determine which types of generic activities to target for digitisation and RPA. Here are a few examples of OTC activities to consider for RPA:

  • Inputting data
  • Checking data for compliance with business rules
  • Extracting data from disparate sources
  • Merging data sources
  • Reconciling/validating data between sources/within defined business rules
  • Creating, combining and amending documents
  • Uploading files to applications
  • Manging files
  • Reporting
  • Sending, reading and receiving emails

The next step is to concentrate on specific types of transactions and using an integrated approach, tackle the efficiency gap that exists from receiving many different types of inputs to process certain transactions. The quick wins for RPA are in the source-to-pay domain, focusing on e-invoicing with suppliers, supplier master data, and blocked and parked invoices. But we’re starting to see more complex domains targeted, and OTC is one of those processing areas that ripe for redesign.

 

The case for automating OTC

Taking information that comes from customers and converting it into a digital format for use with RPA, AI, digital agents, and machine learning solutions, is fertile ground for harvesting digitisation and automation opportunities. While there are certain processing requirements that make OTC unique and require analogue (like telephone contacts) data, as well as digital data (payment info from banks), there are also some very generic, every-day activities that happen at the core of the OTC process, such as document processing, adjustments to orders and invoices, application of promotional offers, etc.

When grouped together, these generic activities create thousands of on-going daily adjustments. These can be automated with RPA, using cloud-enabled software bots and scripts. If you add up the workers employed for managing these transactions across the enterprise, there could be hundreds of workers either clustered or decentralised, who impact processes downstream and upstream in other domains (customer remittances, bank information, adjustments to invoice values or sales updates/requests from customers). These processes determine payment behaviours, dictate working capital requirements and impact customer satisfaction.

Arguably the OTC process will be most beneficial if all information is digitised, identified, and used in various ways to drive new insights from raw data. A well-designed and maintained RPA solution could potentially save enterprises more than 30 per cent; given that most organisations won’t want to replace their core operating platforms or ERP systems, they will need a standardised approach across different systems and tools. It will also be essential to extend core systems so they can add RPA and other digital technologies to improve processing capabilities, either running them alongside bolt-on tools or instead of them. Although today this might seem like a leap for many businesses, the benefits are clear and waiting even longer to modernise these processes could see them falling behind competition.

 

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