The soul of any association, working capital is one of the key factors that keep organizations running in both smooth and testing financial conditions. When a business has a steady cash flow, it can pay salaries, pay its suppliers, keep the lights on, and even deal with the unforeseen expenses of maintaining a business. Without this budgetary pad, organizations rapidly wind up working receipt to receipt and pulling assets from one territory to cover costs in another.
Did you know? 96% of people say that customer service is a key differentiator in their choice of loyalty to a brand. American businesses lose more than $75 billion annually due to poor customer service. With the COVID-19 pandemic taking the world by storm, it has become more critical than ever for businesses, irrespective of size, to make the most of their O2C cycle and optimize their cash flow.
Typical Challenges of Cashflow Management:
1.Late or Partial Payments:- Due payments are perhaps the greatest test SMBs face with regards to income. One investigation demonstrated that 60% of invoices are paid late. This is a genuine income issue since you’ve accomplished the work, yet you haven’t got the cash for it. In addition to the fact that you are out the benefit, but on the other hand you’re out whatever it cost you to finish the activity.
2. Varied Payment Terms:- Varied payment terms and formats can cause major issues for any business. Forecasting, planning, and budgeting become extremely challenging and cash inflow becomes extremely unpredictable.
3. – Lack of Cash Buffer:- A cash buffer is basically a budgetary safety net for your business. To decide how much of a cushion your business needs, you’ll divide cash balances by cash outflows. This will disclose to you the number of days that your money close by in case of no cash inflow into the business. As indicated by a JPMorgan Chase study, the normal SMB has only 27 days of cash buffer close by.
Best Practices in Order to Cash to maintain Sturdy Cashflow:
Order to Cash is the process that takes care of the customer orders lifecycle. It’s a workflow that is also answerable for bringing cash into the company. A well-oiled order to cash process can still be improved, which can lead to higher revenues. In this blog, we’ll share some actionable ways in which you can enhance your order to cash process.
1. Automation – Manual processes require human interaction and any human communication has the potential to introduce errors and disorganization. Instead, automating assignments ensures they will be done the same way every time. You’ll also be able to incrementally upgrade processes by measuring against a baseline.
Reducing manual effort by influencing data from self-service portals It’s likely that your teams are depleting a lot of time pulling and analyzing external data in order to solve omission in the O2C process. They may be attaining or seeking customer websites to find the omitted master data, support advice, or researching discord and reductions. They may also be reaching out to customers to check invoice status, send invoices, statements, and proof of deliveries, and obtain a promise to pay information. A lot of these steps can be minimized if you can flourish the automate process.
2. O2C Analysis – O2C analytics solutions can help you to face these challenges, we use advanced digital technologies, such as machine learning, natural language processing, and big data analytics, to drive predictive modeling and accurately forecast past-due invoices and AR risk. With its continuous cognitive assessment of collections portfolios and strategy, machine learning identifies patterns across vast data sets. It predicts customer payment behavior and helps manage customer credit risk in realtime.
The Best Approach:
There are so many ways to use customer portal data in your O2C process. To figure out the best access for your business, we recommend the following three steps:
A. Improve order entry cycle time We help you to reduce your hand-operated order entry time, releasing up customer service resources so your team can devote more time to helping customers with interpersonal communication.
B. Boost revenue By developing the overall ability of the O2C process, We give you the chance to achieve new business and increase revenue that would have otherwise been missed, due to longer lead times.
C. Enhance customer lead time and comfort We allow you to reduce your lead time to customers – creating fruitful savings in the overall O2C process and improving customer satisfaction.