Modernizing Your Cash Management System: How Automated Receivables Simplifies Your Order-To-Cash Cycle
Automated Receivables
Data is an essential resource for many business and organizations today, especially in the finance department. Unfortunately, as data continues to become more complex and many processes take longer than before, managing receivables can be tedious ordeal. Luckily, automated receivables provide an efficient, low-cost solution to maximize cash management. The transition to this new system is far more easier when one makes sure to have clear understanding of the order-to-cash cycle, the purpose of integrating automated receivables, and what needs to be done in order to take full advantage of this technology.
First and foremost, it is important to have good comprehension of the order-to-cash cycle as it iserves as the basis of any receivables management system. The order-to-cash process refers to all of the steps that business must go through from the point of purchasing to the point of collecting payments from their customers. This process consists of four main stages. The first step is order fulfillment where the customer places an order and the needed goods or services are delivered. The second step is invoicing the customer. This is when an invoice is generated and sent out to the customer. The next stage is that of collecting payments, where the customers make payments on their invoices. Lastly is the reconciliation of accounts between the customer and the business. This is where the accounting is verified to make sure the payments were made and the process is complete.
Once you have good understanding of the order-to-cash cycle, the next step is to understand why it is prudent to incorporate automated receivables into your cash management system. Automated receivables can simplify the process of managing receivables by streamlining the process of managing customer data, orders, and invoices. This can save time and money, which are valuable resources for growing business who need to focus on the core of their operations. Automated receivables also provide improved visibility into the finance function, which can result in more accurate cash flow planning and financial stability.
Now that you have thorough comprehension of the order-to-cash cycle and the purpose of utilizing automated receivables, the next phase is to get started in the implementation of this technology. To begin, decide how you want to go about implementing automated receivables and if you are going to integrate the service with the existing system or get new system. Once you?ve made your decision, the following steps should be done to properly implement the new service and maximize its potential:
Step 1: Assess current processes in order to determine where automated receivables can fit. Look for opportunities to streamline the current process and increase efficiency.
Step 2: Choose the automated receivables solution that fits your companies size, needs, and budget. Consult industry experts to assist in the decision-making process.
Step 3: Integrate the automated receivables service into the existing order-to-cash system. Make any changes that are necessary to ensure that the right data is flowing between the systems.
Step 4: Design workflows and processes, including setting up data flows that connect the various components of the order-to-cash system.
Step 5: Set up analytics to track key performance indicators, such as total receivables, cash flow times, revenue, and other key metrics.
Step 6: Test the automated receivables system before going live. Verify that the data is accurate and ensure that the system is running as expected.
Step 7: Launch the automated receivables system and analyze the performance of the system in order to identify any areas of improvement.
Finally, as with any new technology, it is important to stay up to date with the most current automated receivables solutions and best practices. This includes staying informed of the newest features and integrations that can help optimize the performance of the system and improve the overall financial strategy. By keeping up with the latest developments in automated receivables, finance team can ensure that they are implementing the best technology available to make the most of their cash flow management system.
By understanding the order-to-cash cycle, the purpose of automated receivables, and the appropriate steps to integrating the service, finance team can effectively transition to an automated receivables solution to maximize the efficiency of their cash management system. By keeping up with the newest developments in automated receivables, business can take full advantage of the latest technology and gain competitive edge in the market.
