Maximizing Working Capital With An Order To Cash Solution
Strategies Of Working Capital
Working capital is an essential business metric, as it measures companies financial health, resource management, and short-term liquidity. well-managed working capital cycle shows that company can efficiently manage its current assets and liabilities and convert them into cash, enabling it to keep operations running and maintain its financial health.
As finance executive, you understand the importance of maximizing working capital and are at the helm of finding an Order to Cash solution that will allow your business to do just that. Recovering faster on invoices and getting insights into cash collections and working capital performance is now achievable thanks to modern Order to Cash solutions.
In this guide, we will:
Step 1: Introduce and Define the Order to Cash Process
Step 2: Explore the Benefits of an Order to Cash Solution
Step 3: Consider the Essential Features of an Order to Cash Solution
Step 4: Recommend Strategies to Optimize Working Capital
Step 5: Provide Summary and Conclusion on Maximizing Working Capital with an Order to Cash Solution
Step 1: Introduce and Define the Order to Cash Process
Order to Cash (O2C) is core business process and major supply chain activity that helps business manage their finances and does so by ensuring efficient tracking of sales from order placement to cash collection. The process is set into motion when customer places an order, satisfying the criteria of companies pricing, validation, and credit limits; verifying that payment can be made and ensuring that all arrangements to deliver the product/service are in place.
Following the order being placed, the O2C process manages activities related to preparing shipping, billing customers, collecting payments, booking receivable, and reconciling payments. This cycle is crucial for business to maintain liquidity and successful operation by conducting cash flow management, improving cash visibility, and enabling faster cash collection.
Step 2: Explore the Benefits of an Order to Cash Solution
Order to Cash solutions are built to offer you an efficient and automated way to issue and manage invoices via cloud-based software. By Centralizing your billing process and streamlining the way you manage invoice generation, data entry, and cash allocation processes with automated workflows, your business can experience range of advantages.
Faster Invoice Payment Cash Collection
Improve ordering accuracy and reduce the billing cycle time from few days to just couple of hours.
Automatic Data Capture
The software captures data automatically from key systems and processes, reducing the possibility for errors and minimizing manual involvement.
Increased Visibility
Create transparent and audit-proof accounts Receivable ledgers and improve visibility into the overall financial health of your business.
Step 3: Consider the Essential Features of an Order to Cash Solution
An efficient Order to Cash process requires an array of features from an Order to Cash solution in order to help business improve workflows that minimize manual support and maximize control. Examples of some important features include:
Accounts Receivable Management
Invoicing capabilities
Payment Collections
Ability to Eliminate Manual Processes
Comprehensive Reporting
Integration with Your ERP System
Step 4: Recommend Strategies to Optimize Working Capital
By equipping your business with the right Order to Cash solution and its associated features, you can start implementing new strategies that have the potential to optimize your working capital. Consider the following key strategies:
Automate Manual Processes
Automate manual processes such as data entry, account reconciling, payment postings and collections to reduce errors, increase accuracy and generate cash quicker.
Improve Visibility
An Order to Cash solution increases the visibility of cash collections, accounts receivable ledgers, aging of invoices, and customer payment trends. This helps you improve day-to-day cash visibility and lower the risk of late payments.
Reduce DSO
An efficient order to cash process lowers invoicing cycle times, speeding up the DSO and resulting in early cash collection.
Keep Customers Informed
Keep customers informed by providing them with up-to-date information on their account and payment details.
Step 5: Provide Summary and Conclusion on Maximizing Working Capital with an Order to Cash Solution
An Order to Cash solution can help business maximize their working capital and equip them with the tools to meet the increasing demands of their customers. Implementing the right system and associated features provides business with an opportunity to automate manual processes, increase visibility, and reduce days outstanding, resulting in efficient cash flows.
Ultimately, with the right Order to Cash solution in place, finance executives are empowered to increase the efficiency of their working capital and gain meaningful insights, thus allowing business to sustain their growth and financial health.
