Making Sense Of Order To Cash Solutions For Dso In Accounting: A Guide For Executives
Dso In Accounting
As organizations grow, intricate and sprawling processes are commonplace. Growing larger and more complex comes with its own challenges, especially when it comes to accounting. Tracking every detail with accuracy can be daunting task?especially when considering Days Sales Outstanding (DSO), metric which tracks the average time it takes customers to pay their invoices.
Fortunately, seamless and efficient Order to Cash (OTC) solutions exist to help executives and organizations save time, energy, and resources when dealing with their accounting needs. This guide explains what an Order to Cash solution is, why it is important and useful, and how OTC solutions can be applied to calculating and enhancing DSO in accounting.
What is an Order to Cash Solution?
For starters, an OTC solution is comprehensive provision that is designed to streamline processes such as order intake, billing, credit and collections, and other services. An OTC solution is digital version of paper-based processes of managing customers order from creation to payment for the goods or services provided. With the digital version, all data flows automatically into an organizations financial system and thereby reduces manual entry errors that often tie up resources and slow the process of invoicing.
Benefits of an Order to Cash Solution
There are several key benefits of using an OTC Solution, including automated compliance with order processing guidelines, improved customer experience and satisfaction, and smoother end-to-end customerservice processes.
Automation of compliance: By going digital, companies can ensure compliance with order entry guidelines and rules. This will help eliminate delays in the order intake and billing processes due to manual errors and can lead to increased efficiency for the organization.
Improved customer experience: well-functioning OTC solution offers customers more seamless, accurate and timely experience. Customers can make inquiries about the status of their orders and receive timely responses. This helps to create better customer experience and loyalty to an organization.
End-to-end customerservice processes: Automated OTC solutions can help make customerservice processes faster and smoother. This can lead to customersatisfaction as there will be less time spent on manual processes and more time to focus on customer relations.
How to Calculate DSO using an Order to Cash Solution
Calculating DSO is an important part of accounting, as it allows managers to better understand customer behavior and gives key insight into cash flow within the organization. In order to accurately do this, the Order-to-Cash solution is must. With the OTC Solution, companies can now easily monitor the average time it takes customers to pay invoices.
To calculate DSO, the following equation should be used:
DSO (Total Invoices for Specific Time) (Total Cash Received for Specific Time)
Using this equation, managers can determine how much time is taken by customers to pay their invoices. Once this figure is obtained, it can then be used to determine cash flow patterns, customer behavior, and other key insights that can help the organization plan accordingly.
The Benefits of Using an Order to Cash Solution for DSO
Using an Order to Cash Solution for DSO can lead to many benefits for an organization. The following are the most key benefits.
Complete visibility: An OTC Solution provides instant and comprehensive visibility into the entire order to cash process. This visibility allows executives to better analyze customer payments and cash flow patterns, which in turn allows them to develop strategies and plan accordingly.
High accuracy: OTC solutions have high level of accuracy and removes manual jobs, leading to an improved and faster cash flow management. This accuracy will allow customer payment data to be captured more accurately and timely.
Improved efficiency: OTC Solutions can help streamline the entire order to cash process which leads to improved efficiency. This eliminates the time that is consumed by manual processes, increases productivity and reduces operational costs.
Conclusion
An Order to Cash Solution is comprehensive and automated solution designed to streamline processes such as order intake, billing, credit and collections, and other services. As an organization grows, management of its DSO becomes increasingly important, as does its ability to accurately calculate customer payments. By leveraging an OTC solution for calculating DSO, executives are able to benefit from complete visibility into the process, higher accuracy, and improved efficiency. All in all, an OTC solution is great way for an organization to enhance its DSO and keep close eye on the customer payment cycle.
