Build a world-class order-to-cash process
As finance budgets continue to contract, many finance organizations are seeking to find cost-saving measures in their order-to-cash (O2C) processes. Superior O2C organizations rely on automation, analytics and exceptional finance talent to create processes that reduce the order-to-cash cycle, while improving customer experiences. Building a world-class O2C process requires deep expertise and extensive experience in integrating systems, implementing automation, and streamlining reporting and analysis.
That’s where The Hackett Group® can help. As a strategic consultancy offering leading enterprise benchmarking services to global companies, The Hackett Group provides invaluable services that help companies to measure O2C performance excellence, accelerate business transformation and uncover breakthrough business insights.
Best practices for optimizing O2C processes
Order-to-cash comprises all the steps, actions, and systems in the process of onboarding a new customer and processing orders until the point that a payment is received and logged in the financial books. Optimizing this process can have many positive benefits for an organization – from improving customer service to enhancing cash flow and increasing profitability.
There are six aspects of the O2C process that can be analyzed for process improvement and gains in efficiency. These include credit management, order management, customer billing, cash application, collections management and dispute/deduction management. To achieve the highest levels of efficiency and effectiveness, all of these elements must be well-aligned. This can be difficult, however, in companies where different divisions are jointly responsible for delivering parts of the overall order-to-cash process.
For this reason, it’s essential that finance executives establish end-to-end process ownership and governance to oversee policies, procedures, and metrics. This enables a holistic view of the process and establishes greater accountability, helping to identify bottlenecks and sources of inefficiency more easily. End-to-end process ownership also allows more collaboration between subprocess owners, enabling seamless handoffs between different elements of the process.
Research by The Hackett Group has revealed a strong correlation between end-to-end process ownership and superior order-to-cash performance. Finance organizations with formal, end-to-end order-to-cash process ownership have a 55% lower process cost than peer groups.
Order-to-cash process improvement with The Hackett Group
The Hackett Group is an intellectual property-based strategic consultancy, providing global companies with services and digital transformation, implementation of cloud applications, workflow automation, and analytics that enable Digital World Class® performance.
Drawing from unparalleled IP developed through more than 25,000 benchmark studies with the world’s leading businesses, The Hackett Group is uniquely poised to help companies improve their order-to-cash processes.
We enable companies to improve O2C processes by focusing on three key areas.
Our research shows that world-class financial organizations employ higher levels of process automation in their order-to-cash processes. From processing orders received, scoring credit and touchless processing of customer payments, high-performing organizations automate significantly more processes and accomplish more tasks with fewer FTEs.
World-class order-to-cash systems use sophisticated data and analytics to enable business leaders to make smarter decisions about resource allocation. Analytics can play a significant role in the credit evaluation process and collection policies. By applying process analytics, O2C executives can integrate data from different source systems and identify patterns that can lead to gains in efficiency, as well as savings in operational costs.
As finance organizations seek to improve their O2C processes, they must seek to raise their talent profile as well. Digital transformation and greater focus on working closely with business partners requires a different set of skills from financial team members. Leaders charged with management and accountability of the O2C process will need advanced skills in analytics, technology, and communication.
A picture of O2C excellence
Research by The Hackett Group has identified 10 essential capabilities of a top-performing order-to-cash organization. These capabilities and best practices are critical to driving enhanced efficiency and effectiveness, and delivering exceptional experiences for stakeholders and customers.
These are the hallmarks of world-class O2C systems:
- Credit policy offers a framework for end-to-end processes that includes roles and responsibilities across the O2C process.
- Master data management enables accurate and timely billing, and facilitates BI and analytics.
- Standard payment terms and controls are well-defined, and nonstandard payment terms are controlled through an approval process.
- Electronic invoicing eliminates manual billing triggers to reduce time-to-invoice.
- Segmentation based on risk and value supports collection strategies.
- Proactive contact with key customers ensures that issues are resolved early in the process.
- Technology is leveraged to drive digital engagement, increase process efficiency and deliver exceptional customer service.
- Disputes and deductions are effectively managed.
- Performance management is aligned with objectives and targets.
What makes The Hackett Group different?
The solutions, services and assets provided by The Hackett Group are driven by insight developed through more than 25,000 benchmark studies with the world’s leading businesses. These include 97% of the Dow Jones Industrials, 93% of the Fortune 100, 73% of the DAX 40 and 52% of the FTSE 100. These insights enable us to provide clients with exceptional services for finance transformation, including financial planning and analysis and initiatives to minimize SG&A expenses.
This unparalleled body of intellectual property is made available to The Hackett Group’s customers through a collection of proprietary assets.
- Best Practices Intelligence Center™ is the world’s largest searchable online repository of empirically proven business best practices, performance metrics, implementation tools and associated research.
- Hackett-Certified® Best Practices is a collection of proven, repeatable, documented techniques that deliver measurable business performance management improvements.
- Quantum Leap® is a platform that automates data collection and cuts the effort required for benchmarking in half.
- Digital Transformation Platform is a solution that aligns cloud functionality with best practices and configuration guidance, along with benchmark metrics and best practice process flows that optimize the transformative value of cloud applications.
What is the order-to-cash process?
The order-to-cash (O2C) process comprises all the actions that occur from the moment a new customer is created in the master file until payment is received. These include new customer creation, contract management, credit management, order management and fulfillment, customer invoicing, cash application, collections, and dispute/deduction management.
What are the benefits of optimizing the order-to-cash process?
By improving the O2C process, businesses can reduce or eliminate errors, improve cash flow, increase cost savings, generate greater revenue and enhance the customer experience.
What is The Hackett Group?
The Hackett Group (NASDAQ: HCKT) is an intellectual property-based strategic consultancy and leading enterprise benchmarking firm to global companies, offering digital transformation including implementation of leading enterprise cloud applications, workflow automation and analytics that enable Digital World Class performance.