It is easy to identify quick wins for transformation. Such as paper-based legacy approvals processes. It can be the more subtle processes that have the most impact on business performance. The order to cash process is often a fine example of one such area. It is often overlooked and in need of streamlining.
The Order to Cash process (OtC) which is the elapsed time between your customer placing an order, and you collecting payment. This is a crucial measure which indicates the extent of your processes. If you are unsure of your OtC process or it has never been measured then a health check is recommended.
This is particularly true within organisations that have grown through acquisition. The joining up of processes originating in different places, with diverse business cultures.
A good way to get to grips with your OtC process is by mapping your end-to-end processes. Start from when your customer makes an enquiry, and finish when you collect your payment.
What appears to be the simplest of processes can prompt multiple points of view about who does what. Very quickly can be apparent that there are almost as many opinions about the process, as there are people to do them. This is where the simple act of analysing the OtC process begins to make a difference.
It is recommended that the order to cash process is measured over several orders. What might seem perfectly reasonable process between internal teams can add up to a completely unreasonable lead time.
One contributor to a lengthy order to cash process is ‘people as processes’. This is where the transition of an order from one stage to the next depends on one individual. It can slow down the process, either through a lack of resource or because they view the process as theirs. Therefore, when they are not available the process stops. This can then result in a backlog of processed orders, which adds to the delay.
Businesses often struggle to streamline because people are so busy working with inefficient processes. As a result they do not have the time to take a step back and figure out how to do things better. The benefit of mapping out the end-to-end processes and measuring the OtC is that it enables a business to separate the necessary from the unnecessary to become more streamlined.
Date: March 8, 2021