Unless you’re on vacation or running errands, you probably always take the fastest route to a destination. After all, unnecessary stops and detours take away from other more valuable things you could be doing. The same can be said for the order-to-cash (O2C) cycle. To optimize working capital and profitability, you want the O2C cycle to operate in the fast lane so you can recognize revenue ASAP after an order is placed. But in most companies the 02C commute is fraught with pit stops, detours and even roadblocks. Here are just a few examples of speed traps that occur after customers sign contracts or place orders:

  • Disparate systems—Sales people may need to enter purchase information multiple times across different systems
  • Information delays—Billing may be delayed by PO information that the sales person or customer needs to provide
  • Invoicing delays—Customers are always billed at the end of the month, pushing out the collection time
  • Process delays—The printed invoice is pulled so sales can review it before sending it to the customer
  • Outdated information—The invoice is sent to an outdated e-mail address and you don’t find out until the invoice becomes past due
  • Confusion—The customer withholds payment because she does not understand the invoice

The onramp to a faster O2C cycle

Integrating and automating revenue operations provides a way to remove common speed bumps in the O2C process. As part of automated processes, it is important to track a number of dates or milestones, ideally moving through each as quickly as possible, including the date:

  • The order is placed
  • The product or service is delivered
  • The billing team receives the information it needs to bill the customer
  • The invoice is created and sent to the customer
  • The invoice is due
  • The cash is received.

Having this information enables you to continually evaluate and fine-tune your O2C process for improved flow. And a streamlined O2C process flow in an integrated, automated approach to revenue operations comes with a host of benefits, including:

  • Improved accuracy and sharing—You can capture purchase information once and automatically share it with other systems that need it, reducing error-prone data entry processes
  • Faster billing—Send project- or job-based bills as soon as a service is complete rather than at the end of the month
  • Faster reviews—Enable sales people to view sample invoices during the billing cycle to validate pricing for a new customer
  • Streamlined management—Manage multiple billing cycles more easily with the help of technology
  • Faster problem resolution—Customer service and support teams can more easily and quickly access order and billing information to figure out any issues.

In addition to improving the working capital cycle, removing obstructions from the order-to-cash flow can also help reduce workload spikes for billing and collection teams, making more efficient use of resources and enabling better customer service. Overall, in the ongoing quest to optimize working capital and profitability, O2C processes often have significant room for improvement. They are also a great illustration for the value of integrated and automated revenue operations.

Sandy Bruckner is a seasoned finance executive with proven success driving shareholder value by maximizing revenue, creating efficiencies, and enhancing services to business partners and clients. Most recently, Sandy was Vice President, Order to Cash Finance – North America Operations and Global Strategy at Experian where she provided billing and invoicing, cash and collections, and revenue accounting and reporting services to a diverse set of business units with annual revenues of $1.4 billion.