Order-to-Cash Management: Why and How to Digitalise Your O2C Cycle?  

Financial Restructuring

In an economic context where cash management has become a major challenge for financial departments, the digitalisation of the Order-to-Cash (O2C) cycle is emerging as an essential solution. This transformation not only improves operational efficiency but also reduces processing times and error risks, while promoting information sharing and fostering a cash culture within the company.

Digitalisation Challenges 

 

The digitalisation of the O2C cycle is a major challenge for companies, which must constantly adapt to regulatory and technological changes. Among the challenges to be met, we can cite: 

  • Regulatory evolution: electronic invoicing is becoming mandatory in many countries, representing an important catalyst for the digitalisation of the O2C process. 
  • Inflation and rising interest rates: in a context of tightening financing conditions, optimised cash management and rapid recovery of receivables become essential. 
  • Selective financing: companies must demonstrate solid cash management to access financing and maintain investor confidence. 
  • Supply challenges: digitalisation of the O2C cycle improves collaboration with suppliers and better manages risks related to the supply chain. 
  • Data analysis: recovery takes on an important analytical dimension, with invoice statuses to analyse and workflows to implement to process and optimise cash performance. 

 

 

Benefits of O2C Process Digitalisation 

 

The digitalisation of the O2C process offers many advantages for companies, including: 

  1. Operational efficiency: automation of low-value-added tasks allows teams to focus on more strategic missions, such as analysis and decision-making. 
  2. Reduction of processing times: document dematerialisation and workflow automation accelerate exchanges between different services and partners, thus reducing order and payment processing times. 
  3. Decreased error risks: digitalisation limits input errors and omissions through data centralisation and homogenisation. 
  4. Information sharing and cash culture: the provision of reliable and real-time information promotes collaboration between teams and informed decision-making, while reinforcing the cash culture within the company. 

 

 

Best Practices for Successful O2C Process Digitalisation 

 

To fully benefit from the digitalisation of the O2C process, several best practices can be implemented: 

  • KYC (Know Your Customer): a robust KYC process, including a data provider, helps control the quality of input data and the uniqueness of customer identifiers. An interface between the CRM and the customer repository facilitates data retrieval and credit analysis. 
  • Order: using a secure customer portal ensures the quality of input data. Order-related information is instantly shared with the procurement service. Credit limits and the current balance are viewable in the order validation interface. 
  • Invoicing: dematerialised (PDF) or electronic (EDI) invoicing facilitates transmission. For customers with a customer portal, statuses are automatically retrieved to process rejections/refusals as soon as possible. 
  • Payment: integrated payment solution and/or payment via the customer portal. 
  • Matching: use of predictive and machine learning to refine matching criteria based on each customer’s payment behavior. The archivable ratios today exceed 85%. 
  • Collection: use of AI to define payment behavior based on history and propose relevant customer portfolios. 
  • Disputes: dispute management module integrated into the collection tool, allowing for internal follow-up workflow management with stakeholders involved in the resolution process. 
  • Cross-functional data and KPI sharing: sharing O2C cycle data and KPIs beyond credit management and collection teams is a key element in spreading the cash culture. 

 

 

Key Steps in Order-to-Cash Cycle Digitalisation 

 

To successfully carry out the digitalisation of the O2C cycle, several key steps should be considered: 

  1. Assessment of digital maturity: before embarking on the digitalisation of the O2C cycle, it is essential to assess the company’s digital maturity. This evaluation helps identify the strengths and weaknesses of existing processes, opportunities for improvement, and challenges to be met. 
  2. Definition of the digitalisation strategy: based on the evaluation results, a digitalisation strategy adapted to the company’s needs and objectives should be defined. This strategy should consider technological, organisational, and human aspects. 
  3. Choice of technological solutions: the selection of appropriate technological solutions is a crucial step in the digitalisation of the O2C cycle. Companies should opt for scalable, secure, and interoperable solutions that meet the specific needs of their industry. 
  4. Implementation and integration of solutions: the implementation of the chosen technological solutions should be carried out methodically and rigorously, ensuring their integration with existing information systems and user training. 
  5. Change management: the digitalisation of the O2C cycle involves significant changes in processes, organisations, and skills. Appropriate change management is necessary to encourage employee adoption and ensure project success. 
  6. Monitoring and continuous improvement: the digitalisation of the O2C cycle is a continuous process, requiring regular monitoring and continuous improvement. Companies should establish relevant performance indicators and track their evolution over time to identify areas for improvement and continuously optimise their cash management. 

 

What Changes for O2C Process Stakeholders? 

 

The digitalisation of the Order-to-Cash cycle offers benefits for all company stakeholders: 

  • For the financial department: improved cash visibility, reduced payment delays and default risks, as well as improved decision-making based on reliable and real-time data. 
  • For sales teams: improved customer satisfaction through simplified and faster order and invoicing processes, as well as better collaboration with credit management and collection teams. 
  • For credit management and collection teams: reduced low-value-added tasks, improved relaunch and collection process efficiency, and better dispute management. 
  • For customers: improved purchasing experience, thanks to simplified and secure order, invoicing, and payment processes, as well as better transaction traceability. 

 

 

The digitalisation of the Order-to-Cash cycle is a major challenge for companies, allowing them to improve their financial performance, strengthen their cash culture, and optimise their operational efficiency. By relying on best practices and adopting a comprehensive approach to Cash Excellence, companies can meet the challenges related to O2C cycle digitalisation and fully benefit from the opportunities offered by new technologies. 

 

 

For more information, see our latest study on Innovation in the Finance Function 

If you would like to receive this study and a customised benchmarking from the experts at Eight Advisory, click here 

 

Editorial team: 

Pierre Gauthier 

Florian Jouvenot 

Colin Seconde 

Pierre

Gauthier

Partner

Transformation Finance

Eight Advisory Paris

Florian

Jouvenot

Director

CFO Advisory

Eight Advisory Paris

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