Cash Flow Solutions And Accounts Receivable Automation In Order-To-Cash Management
Accounts Receivable And Collections
As professional in the accounting field, you have likely heard the term “order-to-cash” (OTC) management. OTC is one of the most important financial processes to any business, because it is process of turning customer orders into cash. It is critical component to any companies cash flow and if not managed carefully, it can be source of financial instability. To simplify this process, and to ensure that accounts receivable and collections are being managed effectively, automation solutions are often necessary. well-implemented OTC automation solution can save incredible amounts of time, effort, and money, so it is worth researching how such solutions work.
In this article, we will take deep dive into OTC automation solutions and how they can help business manage their Accounts Receivable (AR) and collections. We will discuss the key features of an effective automation solution, the different types of solutions available and their advantages, and the best practices for successful implementation.
Understanding Accounts Receivable and Collections in Order-to-Cash
Before diving into an OTC automation solution, it is important to understand the basics of Accounts Receivable (AR) and collections. AR refers to debts that company is owed by customers. In basic OTC cycle, customer order is received, shipped and invoiced, and the customer then pays the invoice in full. In more complex cycle, you have critical steps like credits and collections. Depending on the OTC cycle, the customer may need to request credit, and the credit can be discussed, approved and applied by the AR team. Also, collections must be managed to ensure that customers are paying their invoices in timely manner.
For an effective OTC process, it is important to understand the complexities of these steps. Automation solutions can simplify these processes and streamline the OTC cycle for more efficient management.
Overview of Automation Solutions
An automation solution operates by setting up rules, processes and procedures that encompass the entire order-to-cash process. These rules can be modified by the user, giving them significant control over each step.
The automated process can be tailored to the specific needs of the business and can include features such as credit checks, automated dunning letters, order processing, invoicing, payment processing, and collections. An automation solution can also track customer data and provide detailed analytics, which can be invaluable when it comes to forecasting and making informed decisions about future transactions.
Once set of processes is created, it is easy to duplicate them across multiple clients and transactions. This streamlines the entire process, resulting in improved accuracy and less manual intervention.
Types of Automation Solutions
There are two main types of automation solutions available. The first is on-premise automation, where software is installed on the companies own computer at their place of business. This type of solution requires the company to set up and maintain their own system, which may require additional personnel, as well as larger IT budget. However, this type of solution also offers higher level of control and customization, as well as more security.
The second type of solution is cloud-based automation. This is more cost effective solution, since there is no need to purchase and maintain any hardware. In addition, cloud-based solutions are typically easier to set up and maintain, as well as easier to scale up or down if needed. Cloud-based solutions are often more secure than on-premise solutions, as the data is securely stored off-site.
Advantages of Automation Solutions
There are several benefits to implementing an automation solution for OTC management. First, it eliminates the need for manual intervention, resulting in fewer errors and improved accuracy. Automated solutions can also significantly reduce the time it takes to process transactions, freeing up personnel for other tasks. Automation solutions can also provide greater insight into customers? behaviors and purchasing patterns, allowing companies to more effectively manage their cash flow, and make better decisions when it comes to pricing and customer relations.
Furthermore, an automated solution can potentially save significant amount of money since it eliminates the cost of employing additional personnel and managing hardware.
Successful Implementation
When it comes to implementing an automation solution in order-to-cash management, there are several steps to follow.
The first step is to assess the companies needs and create plan of action. This involves looking at the existing processes, identifying potential bottlenecks, and creating timeline for the implementation.
Next, the company needs to find the right platform for their needs. There are several vendors that offer OTC automation solutions, so it is important to research the different options and select the one that best fits the companies needs. This should include research into the specific features offered, and how the system integrates with the existing software platforms.
Once the platform has been chosen, the next step is to set up the automated rules and processes. This includes customizing the system to meet the companies specific OTC workflow. It is important to also consider customer preferences when setting up the rules and processes, to ensure compliance with customer policies and procedures.
Finally, the company needs to put the system into action. This involves training employeeon the new system, as well as testing and troubleshooting any issues that may arise.
Conclusion
When it comes to order-to-cash management, automation is the key to success. Implementing an automation solution can significantly reduce time and effort, improve accuracy, and provide greater insight into customer behavior. There are two main types of automation solutions on-premise and cloud-based and each comes with its own advantages. Selecting the right solution and successful implementation are critical for streamlining the OTC process and ensuring that accounts receivable and collections are managed effectively.
