Methods for using order-to-cash automation to reduce revenue losses

According to research, revenue leakage causes companies to lose an average of 9% of their earnings. This is what they need to have made in profits. Nearly 42% of businesses had at least one experience with this issue. Fortunately, this can be fixed by simplifying the order-to-cash (O2C) process, which can decrease revenue losses and save 10–15% of earnings.

A recent study found that 92% of CFOs want to streamline their financial procedures, with O2C being a key part. If you want to simplify your order-to-cash automation, contact a Richardson accountant.

How Can the O2C Lifecycle Be Automated?

The order-to-cash (O2C) cycle can be significantly improved by automating it. Businesses can digitize documents for more straightforward sharing, retrieval, and storage while cutting down on manual errors and delays by substituting digital imaging and data capture technologies for paper methods.  

Sales order automation software provides real-time inventory updates for exact fulfillment while streamlining the generation, processing, and management of orders. Order routing is automated by intelligent workflow systems based on shipping, inventory, and priority limitations, which results in quicker and more accurate processing.  

What is revenue leakage?

Money generated by a business but not kept or received as profit is known as revenue leakage. Customers spend this money, but companies never retain it. Undercharging consumers, poor processes, human error, pricing and billing issues, and outdated billing systems are some of the causes of revenue leakage.

Signs of a faulty order-to-cash procedure

It can be difficult for businesses to identify revenue leaks. However, recognizing the problem is the first step towards discovering an answer. The following are signs to watch for:

Excessive manual labor for the finance team: Research indicates that 70% of the finance staff devote at least ten hours a week to manual tasks like processing invoices, tracking past-due accounts, and conducting reconciliations. Manual labor reduces productivity, increases the possibility of mistakes, and results in revenue leakage.

• Improper integrations of systems

Isolated or poorly integrated systems produce a disconnected process that lacks real-time revenue visibility. The effectiveness of data flow is limited by native integrations that are inadequate to satisfy the needs of a growing company. It can take months to develop manual workarounds to avoid unusual integrations.

• Lengthy approval procedures

According to studies, 77% of customers have a drawn-out and challenging buying process. This reduces upselling opportunities, irritates customers, and affects the sales cycle. Postponed approvals limit corporate growth and create bottlenecks in the entire order flow.

• Challenges concerning security and compliance

Activities that gather (PII), maintain payment details, and handle invoice information need to be safe and comply with legal requirements. Adhering to security measures can be difficult in manual and sophisticated O2C operations.

• Manual accounts receivable

Particularly for SaaS products, manual follow-ups for unpaid bills can be extremely laborious and resource-intensive.

• Payment failures

Payment failures occur for a number of reasons, mainly unintentionally. For example, a decline in credit card usage or a transaction server not responding could be typical and easy causes. Extreme bias could end a healthy relationship in such cases. To prevent such payment discrepancies and auto-cancellations, the O2C system benefits by having a backup payment option.

Strategies for reducing income loss

The finance team may rethink the O2C process, eliminate the use of manual labor, and obtain useful information by utilizing an automated platform. Some revenue protection strategies to think about are as follows:

• O2C process automation

Eliminate data input errors, stay away from silos, and integrate sales and finance in a smooth manner. To guarantee invoice processing, data accuracy, PO matching, and reconciliation, implement pre-made O2C workflow packages.

• Improved cash flow efficiency

Customers have a negative experience, and the cash flow is pulled down by a slow billing cycle. Processing orders, collecting payments, and sending invoices all take less time when automated. It accepts a variety of payment options and constantly reminds the consumer before the due date.