The financial health of a company is largely dependent on having satisfied and loyal customers. A recent Walker report points out that by 2020, customer experience will outweigh both product features and pricing combined when it comes to a buyer’s decision. That means, more than ever, to maintain an edge over the competition, it’s imperative to build a reputation of reliability, expediency and—as a result—excellent customer service.
A key source of frustration for both business and individual customers is the inherent inefficiencies aggravated by manual processes used to interact with our customers, starting with the order management process all the way to making a payment. Reduce or eliminate those tedious, error-prone interactions, and it becomes simpler and more seamless to do business with your company, thereby improving the customer experience.
What business process has a more negative impact—to both your customer’s experience and your operations—than a poorly-integrated or an outright manual order-to-cash (O2C) cycle?
O2C as a source of customer frustration
The end-to-end O2C process involves multiple departments, teams and technology silos within the organization. It begins with order receipt and moves to processing, fulfillment, accounts receivable invoice delivery, payment and, finally, collections management.
When orders are processed manually, human error can wreak havoc. With so many teams, processes and applications involved, it’s no wonder the process is fragmented and error-prone. Manual entry and lack of automation result in operational inefficiencies, of course, because the crucial data—customer data, quantities, part numbers and prices, for example—don’t automatically flow from one system to the next. This means crucial data often become inconsistent.
When a customer wants to find the status of an order, does the online order status truly reflect where the order is in the queue? Do the individual line items on the customer’s invoice reconcile with the amounts they agreed to?
Often, the answer is no, and it can affect your receivables and days sales outstanding (DSO). A discrepancy on a single line item can cause the customer to withhold payment for the entire invoice until the item is resolved. Not only is this bad for your cash flow, it erodes customer trust and loyalty. It could also mean the wrong item or service was delivered to the customer, causing both a return and even more bad sentiment.
Manual O2C processes adversely affect operations in other ways. Without a primary system-of-record, tracking down errors becomes a major source of frustration for employees. Besides slowing cash flow and causing excessive returns processing, this increases call volumes to the support and billing teams, who then have to dig through multiple systems to find out where the error was first introduced and to repair it there and downstream.
O2C automation as an opportunity
Order-to-cash automation provides an opportunity to alleviate such customer frustrations and, in turn, improve the customer experience and build customer loyalty. By automating the entire O2C process, an organization can rely on technology to efficiently and accurately move the order through the cycle, from one department and system to the next.
How does O2C automation benefit customers? For one thing—a big one—it provides customers with visibility into their order status and history, without having to pick up the phone or send an email to make simple inquiries. This capability alone boosts customer confidence. O2C automation can also let you communicate with and support customers through whatever channel they prefer.
O2C automation can give customers the ability to:
- View a history of orders and payments using a secure customer portal
- Receive and view invoices in the format they prefer
- Utilize self-service options, not just to access invoices but to easily pay them using a variety of methods
- Use other communications channels to inquire about and resolve issues without receiving annoying collections calls
These and other capabilities provided by O2C automation enhance the customer experience and overall satisfaction, meaning they’re likely to stick with you as their primary supplier.
O2C and your company’s financial business
The benefits of O2C automation go beyond the satisfaction of those making the buying decision, even beyond ensuring they pick you as a vendor over your competition. Automating the O2C process generates internal benefits to an organization as well, all of which can bolster your financial health.
With fewer manual touchpoints, an organization can focus its resources on personalized customer service and other high value initiatives, instead of tedious, lower value tasks. For example, O2C automation lets a company:
- Accelerate flow-through of orders from system to system by eliminating manual steps
- Increase the number of on-time customer payments by simplifying payment methods and availability
- Decrease costs associated with cash collection by ensuring customers get what they ordered the first time
- Avoid write-offs due to bad debt, disputed invoices or returns
- Decrease errors by automatically validating/verifying information upfront, before they make their way downstream
- Reduce the number of overall collections calls (and thus collections staff required) by providing automated reminders through other communication channels
- Decrease days sales outstanding—by collecting cash faster.
When orders get processed accurately the first time, your customers are happy. Happier customers mean fewer customer complaints for your team to handle, fewer delayed payments and fewer collections issues. All these reductions lead to reduced operations costs and lower DSO. That’s a financial boost no organization can ignore.
There are two other noteworthy ways O2C automation can have a positive financial impact, beside those resulting from customer satisfaction and more efficient operations.
We’ve already said O2C automation can help reduce collections calls. It can also provide insights into recurring trends in customer calls, trends that can hold up timely payments. Knowing that the price on a web order form for a part doesn’t match the one in the billing system, for example, or that a VIP customer isn’t automatically getting the promised discount—insights like these let you make the appropriate adjustments to avoid future customer calls and complaints even further.
Finally, the improvements resulting from O2C automation free up your staff—from IT to billing to collections—to focus their efforts on attracting and satisfying your top tier customers—all made possible by orchestrating a more efficient end-to-end O2C cycle.
O2C automation: Your financial health may well depend on it
All these benefits result in higher customer satisfaction. This helps ensure you have happy, promptly-paying and recurring customers. Automation accelerates payments and reduces DSO, but it also lowers internal costs by eliminating manual processes, data entry errors and the customer service fire drills they can create.
But the financial impact to your company goes beyond these. Making a sale is no longer all about pricing and features; it’s about the experience. The heightened customer experience made possible by O2C automation can actually allow you to charge more than your competitors and still make the sale. In fact, Cap Gemini reports that in 2017, 81 percent of consumers say they’d pay more for a product or service to the vendor that provides a better customer experience.
Automation results in a better customer experience, quicker payment and lower DSO. Given the host of benefits, O2C automation simply makes sense. After all, 2020 will be here before you know it.
Steve Smith is U.S. chief operating officer at Esker.