Senior finance executives are expected to take a more proactive role in the organization when it comes to strategy, but outdated processes stand in the way of success.
Competition has never been fiercer and that’s resulted in more being expected from senior executives than ever before. It’s no longer enough to excel in the tactical arena; now it’s essential that executives be the master of both tactical and strategic ideas, actions, and initiatives.
A recent IOFM white paper “4 Ways Senior Executives Benefit from Order-to-Cash Automation,” illustrates how automating the order-to-cash (O2C) cycle enables finance executives to fulfill the goals required. The paper points out that finance executives in today’s business environment must fill four distinct roles: Steward, the person responsible for preserving assets by minimizing risk; Operator by making the finance operations efficient and effective; Strategist by setting the direction and shaping enterprise-wide strategy; and Catalyst by influencing the rest of the organization to perform better through example.
Paper and manual processes create roadblocks
What keeps executives from fulfilling these roles to the best of their capacity is the reliance of the finance operations on paper and manual operations in their O2C process. IOFM did a benchmark study that found that only 12 percent of the businesses surveyed had deployed an e-invoicing platform and only 17 percent have implemented a supplier portal. Does that really matter? Statistics say it does. IOFM cites a PwC study to conclude that “O2C automation is a key attribute of a top-performing finance department, which runs at 40 percent lower cost as compared to their median peers and spend 20 percent more time on analysis to achieve improved insight into leading market indicators.”
The IOFM white paper focuses on how this applies specifically to private, closed-loop, one-to-many systems where a many seller and buyers securely transact with one another though a single connection; however, the benefits of O2C automation can apply to any B2B transaction mode.
How O2C automation helps fulfill the 4 roles
- Steward – O2C automation helps fulfill the role of Steward by essentially authenticating an invoice throughout the O2C process. This is done by strengthening controls, archiving data, and identifying invoice origination. Real-time visibility is provided for internal and external stakeholders, which reinforces the integrity of the operation.
- Operator – When it comes to the role of Operator, inefficiencies abound in paper and manual processes with a result that more than 40 percent of employee time is spend in activities that could be automated meaning they spend that much less time working on strategic initiatives than can help with company growth. Digitizing and normalizing data facilitates the invoice approval process and if the automation platform includes e-payment functionality, that enables enterprises to ensure price and term compliance across the entire company.
- Strategist – There’s no role more important for today’s CFOs and other finance executives than that of Strategist. Data is vital to fulfilling that role, yet, according to an Experian study, 83 percent of CIOs surveyed indicated that their company’s data was not being properly utilized and 64 percent felt that the data was not being optimized. Implementing a robust O2C automation solution will provide the sort of advanced analytics that will enable finance to optimize all transactional data, including the ability to drill down to the line-item level. This will allow finance executives to forecast and make business decisions with greater clarity and accuracy
- Catalyst – Cash flow and working cash management are always top of mind and finance is looked to for improvements in these areas. In fact, finance is expected to play the role of Catalyst in getting better results. This is especially important in a tight credit situation, which is something that SMBs continually face. Banks, normally the first source for a credit and cash infusion, are now sharing that space with alternate financing opportunities. One of these is channel finance, where sellers can receive payment in a shorter, proscribed time period from a third party; that third party then takes on the responsibility of collecting payment from the buyer. This eliminates a number of concerns on both sides of the equation. Sellers can rely on cash to increase their inventory and grow their business. Buyers know that their suppliers are secure, that they are paying the correct amount per invoice, and that disputes, if occurring, will be handled by the channel finance provider, allowing good relationships to be maintained between buyer and seller.
Download the IOFM white paper to realize the full benefits of order-to-cash automation.