Solving For Goals In An Accounts Receivable Department Through An Order To Cash System
GOALS FOR ACCOUNTS RECEIVABLE DEPARTMENT
businesses in virtually every industry have need to centralise the ordering, settling and dispute resolution processes of their Accounts Receivable. Managing Accounts Receivable (AR) is an area of finance that demands specialised set of processes, practices and software solutions that are designed to support collection, settlement, payment and dispute resolution activities across various markets, suppliers and customers. Fortunately, Order to Cash (O2C) systems are designed to provide such support. Here we will explore the steps necessary to implement an effective Order to Cash system and how this can support successful Accounts Receivable goals.
First, company must identify and set clear metrics for what success looks like in their accounts receivable department. This could take the form of an ideal days sales outstanding (DSO) goal, or debt collection goal tied to the percentage of receivables paid before the due date. These goals should be realistic, achievable and properly documented.
Second, comprehensive and effective plan must be developed that includes customer segmentation, customer periodicity (frequency), credit and collection policies as well as accounts reconciliation processes. The plan should also outline customer on-boarding and service level agreement guidelines. Organizations should also consider risk mitigation and dispute resolution strategies, such as requiring customer approved credit limits, setting customer specific terms of payment and leveraging fintech solutions to facilitate payment.
Third, organizations should look to implement an O2C software solution that will automate the customer onboarding process, provide integrated customer and vendor reporting and support real-time customer support. comprehensive O2C system will leverage automation and machine learning to ensure maximum customer loyalty and satisfaction levels as well as optimized cycle times. Furthermore, the system should also ensure that customer payment preferences are met, such as offering various payment options and expedited payments.
Fourth, an O2C system must provide analytics on customer and vendor transactions. Analytics should include customer segmentation, vendor predictability, dispute and credit risk management, customer satisfaction and automation optimization. As well as performance tracking, customer benchmarking and customer performance ratings.
Finally, the system should allow for timely customer feedback and insights. This will give customers platform for feedback on buy gifts and services and help the organization continually measure its performance vis-?-vis customer expectations. Prompt and accurate customer feedback will also help organizations stay ahead of changing customer preferences, providing timely insight into opportunities for improvement.
When used properly, an O2C system can be an invaluable tool for managing Accounts Receivable goals. By utilizing customer segmentation, credit and collection policies, and customer specific terms, organizations can manage their customer profiles holistically and consistently. Automation and machine learning will ensure maximum customer satisfaction and improved cycle times. Analytics will provide insight into customer behavior, enabling organizations to better understand their customers and make informed decisions. And customer feedback will provide organizations with the opportunity to assess customer satisfaction and make necessary adjustments. All in all, an Order to Cash system is well-suited to managing Accounts Receivable goals and providing organizations with the insight needed to ensure success.
