The link between revenue leakage in the order-to-cash (O2C) process and automation has become an inflection point for businesses that’s placing digital transformation at the forefront of future strategy. In a recent survey of 200 CFOs, controllers and financial leaders by Zone & Co, virtually all of them estimated that manual tasks and disparate systems were costing upwards of $5 million every year, or at least 5% of annual revenue. Worse, companies with low levels of automation were 20% more likely to experience significant revenue leakage compared to digitally savvy peers.
This unrealized revenue from inefficiencies is why 75% of these businesses have concluded that O2C process improvement is not just about alleviating pain for their finance teams or better serving their customers – it’s a matter of survival. With digital transformation on the horizon, here’s everything you need to know about the current and future state of O2C and how to stay ahead of the competition.
Overview of the current O2C landscape
While systems like CRMs and ERPs are commonplace tools for streamlining order-to-cash processes that support a wide range of business functions, the revenue leakage challenge has led companies to take a more holistic view of O2C maturity. The data and strategies that improve one aspect of the O2C process often rely on the efficiency of multiple other activities, and this interdependency means optimization is an end-to-end challenge.
Businesses need to evaluate the level of automation at each of the following O2C stages:
- Order management
- Credit management
- Order realization & shipping
- Customer invoicing & billing
- Account receivables
- Payments collections
- Real-time reporting & data management
With the exception of invoicing and billing (which has substantial room for improvement), at least 50% of respondents to the 2024 State of Finance Automation Survey reported that their processes ranged from “partially automated” to “fully manual”. On top of that, there is a high correlation between these deficiencies and common challenges that lead to revenue leakage, including:
- Delayed payments
- Invoicing inefficiencies
- Cash flow problems
- A lack of real-time reporting
- Data disparity
- Compliance and regulatory issues
All of these challenges can lead to costly bottlenecks in the cash conversion cycle. DSOs that extend out 40 days or more diminish the overall financial health of an organization.
Challenges in O2C processes
There are concrete reasons why systems with low levels of automation lead to revenue leakage and headaches throughout the O2C cycle for departments like Billing and Accounts Payable (AP). When businesses evaluate their operations, the following pain points are often indicators of a need for investments in software and integrations that promote automation and optimization.
Fragmented systems and data inconsistencies
While systems like ERP, CRMs/CPQs and payment gateways are often highly compatible, even a best-of-class platform like NetSuite usually doesn’t integrate perfectly with its third-party counterparts. If your O2C architecture is siloed, fragmented or requires manual reconciliation for part of the process, data inconsistencies creep in and contribute to revenue leakage.
A shocking 92% of businesses reported partial or no connectivity across the processes and data of their O2C cycle in Zone’s 2024 survey.
Inefficiencies in manual processes that lead to errors
Errors can be costly, and they take additional time and resources to correct and contain. Worse, resolution is typically a mindless process that consumes the time and energy of high-level thinkers within your business.
Nearly 58% of surveyed financial teams have to reopen their books once a year to address errors, and 35% make this a much more frequent process.
Difficulties in real-time visibility and reporting on payments and receivables
Real-time reporting is where finance teams connect to the strategic side of the business, and the value of their contribution is measured in the accuracy of speed of the insights they uncover. Without automated systems that preserve data integrity and empower real-time visibility, CFOs and controllers are left focusing on lower-level tasks and error management instead of maximizing the value of their expertise.
Only 17% of businesses report a fully mature reporting process, and 52% are relying significantly or fully on inefficient manual processes for reporting.
Future O2C Goals for Financial Organizations
Financial leaders are already targeting workflows across their O2C cycle for bottlenecks and inefficiencies, but there is still a lot of work left to be done. The following O2C trends are where businesses are hoping to show the most improvement in future years as they optimize and upgrade their systems.
- Streamlining end-to-end O2C workflows: While individual areas like credit management or accounts receivables may be focal points for improvement, finance teams are looking to implement solutions that support end-to-end enhancements in the O2C cycle.
- Moving toward real-time payment visibility and reporting: Because real-time data streams depend on efficiency and accuracy throughout the O2C process (as well as directly impact critical business decisions) this is viewed as a “holy grail” of digital transformation.
- Enhancing compliance and control measures: Regulatory requirements and billing complexity are intensifying side-by-side, and an inability to maintain clean data and generate accurate reports represents a serious business liability.
The role of automation in O2C transformation
As businesses embrace digital transformation, increased automation will be at the center of O2C financial management strategies. Holes in the process – even between top systems like Salesforce and NetSuite – inevitably lead to manual work that compromises the entire O2C cycle.
With the majority of major O2C architecture components in place (ERPs, CRMs, etc.) financial leaders are increasingly looking for software and integrations that extend the native capabilities of these systems and fully automate their workflow. For instance, billing and revenue experience a high correlation between a lack of automation and revenue leakage.
Solutions like ZoneBilling eliminate the need for manual work across these processes to deliver O2C process improvement across the entire cycle. A native SuiteApp, ZoneBilling operates entirely within NetSuite to streamline invoicing, reduce errors and optimize payment collections.
ZoneBilling also doesn’t require finance teams to juggle multiple logins or adapt to non-preferred software, and by leveraging automation through NetSuite’s substantial data management capabilities, these benefits are distributed across your business to support real-time visibility through your business intelligence (BI) tools.
Actionable strategies for O2C improvement
When looking for O2C process improvement opportunities, there are several key strategies that can lead to increased maturity across multiple systems at once. Financial leaders should consider the following when evaluating potential solutions.
- Implementing integrated platforms that centralize data
- Using predictive analytics to anticipate payment patterns
- Embracing workflow automation to minimize human error and delays
- Enhancing efficiency by automating manual tasks
- Improving reporting accuracy and real-time insights
In all of these scenarios, software like ZoneBilling helps unify your data and analytics systems by eliminating manual work and enabling automation throughout your O2C cycle.
The Value of O2C Optimization for Financial Organizations
In the next 12-24 months, nearly every financial leader in the 2024 Zone Financial Leaders Survey indicated they would be investing in the O2C process to support a variety of business goals. Through these efforts, they expect to reduce revenue leakage, use increased time and bandwidth to develop the businesses based on cash flow projections and market conditions, drive toward real-time visibility and enhance customer satisfaction.
Zone & Co offers a range of software and integrations to support O2C process improvement for businesses at every stage of maturity. ZoneBilling is just one key integration that equips NetSuite users in accounts payable with automated billing and revenue to eliminate manual work, reduce errors and empower leadership with the real-time data streams they need to shape and grow the business.
Download the full 2024 State of Finance Automation Survey Results, for in-depth guidance about how to bring your O2C cycle to maturity.
FAQs
Share
