Order to Cash Leading Practices

Onshore Performance Offshore supporting your Growth

Finance & Accounting BPO Managing Director at CCI BPO

• Started my Order to Cash career with Xerox Europe in their Dublin Shared Financial Services centre, where I occupied various Order to Cash operational functions and Lean Six Sigma process improvement roles.

• I then worked at Accenture as the Global Order to Cash Capability Director for Business Process Outsourcing. During my time at Accenture, I helped Clients to transform their Order to Cash operations driving the industrialization and process excellence agenda within their operations. I also helped to refine the BPO Order to Cash Service Delivery Suite to reflect leading practices.

• In addition to supporting Clients to shape their outsourcing partnership with CCI for Order to Cash functions, I am actively involved in various cross function assignments to drive the definition, business case and implementation of CCI Order to Cash Service Delivery Model across all our teams to drive toward process standardization and process excellence.

• I focus on helping our Clients to drive value and financial business outcomes out of their Order to Cash outsourced functions and also support them in designing best in class onshore retained organisations to build a strong governance model.

Order To Cash Leading Practices

Order to Cash

productivity benchmark

by function

Business Outcomes

based Delivery Model

Voice of The Business

to unleash the power of Working Capital and Cash Flow

The usual mistakes that most companies make when dealing with Order to Cash functions

Business Outcomes developed to meet Organisations’ Key Value Levers to optimize Service Delivery

Leading Practices from Basic to World Class to optimise Working Capital, reduce Operating Costs, maximise Revenue and improve Customer Experience

World Class Order To Cash Focuses on the 4 Critical Value Levers Simultaneously

Working Capital $ Less

MORE

Re

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e $

Traditional Credit & Collections High Performance Order To Cash

• Ensures all forecasted revenue is billed & collected • Promotes visibility & accountability around revenue leakage drivers • Uses predictive analytics for collection strategies and cash

forecasting

• Focuses on tactical credit & collections solutions (e.g. # of calls, credit & order holds)

• Promotes a reactive approach towards improving credit, collection & payment processing functions

• Primarily targets bad-debt by focusing on A/R reduction

Operating Costs $

Cu

sto

me

r

Sa

tisfa

ctio

n

LESS More

Less

MORE

Less MORE

Organizations can effectively reduce “Revenue Leakages” and achieve greater value by shifting from traditional Credit and Collections to comprehensive Order To Cash management

Traditional

Credit &

Collections

High

Performance

OTC

Definition of Revenue Dilution in the B2B Industries

100% 3-8%

92% 1-3%

2-6% 0.5-2%

1-2% 76% 1-3%

Cash

Received

Billing Leakage

• Price or Product Under Billing

• Warranty

• Contract Errors or Misses

Booked

Revenue

Potential

Booked Order

Value

Lost Sales

• Failed Credit Check

• Internal / External Delays

• Cancelled Orders

Unearned Cash Discounts

Logistics Errors

• Shortages

• Overages

• Subs

Compliance Deductions • Carrier

Related

• Complete PO’s

• Packaging

• Out of Stock

Write-Offs

• Bad Debt

• Good Will Credits

• Uncollected Invalid Deductions

Loss of

$24 for

every

$100 of

Sales

Illustrative case study depicting total potential Revenue Dilution at $.24 on $1 of potential sales (Leakage ranges from 6-25% depending on Industry)

Front Office Order Management

Voice of The Business

Front Office

Order

Management

Middle Office Customer Disputes

Voice of The Business

Middle Office

Customer

Disputes

Back Office Collections & Payment Allocation

Voice of The Business

Back Office

Collections &

Payment

Allocation

Business Outcomes to meet Organisations’ Key Value Levers to Optimise Service Delivery

Order To Cash Leading Practices Collections and Process Improvements

• Credit policy is clearly defined, monitored, communicated and operationalized across the whole organisation

• Customers can submit self-service requests for credit line changes

• Request for credit assessment submitted electronically and readily available to sales forces to submit new requests which are

tracked and have online status available until decisioned. Utilize Optical Character Recognition (OCR) when paper forms are

required

• Function segmentation within credit department i.e. activities split between new account processing, ad-hoc events, continuous

credit assessments

• Last credit review date is logged in the computer system

• Automated system trigger/alerts for periodic credit reviews to advise when a debtor is approaching their credit limit. Balances to

take account of real time transactions including open sales orders

• Partial or full cash-in-advance payments are requested when credit fails in order to maintain revenue growth

• Automated Credit Scoring together with credit decision table- Combine live D&B data and ledger data to derive a credit limit score

segmentation / collections strategy / to promote most effective dunning / chasing process

Other leading practices by Business Vertical can still be implemented depending on Client

positioning within maturity curve (Basic – Intermediate – World Class)

Order To Cash Leading Practices Collections and Process Improvements

Other leading practices by Business Vertical can still be implemented depending on Client

positioning within maturity curve (Basic – Intermediate – World Class)

• Quote and order management systems are integrated with current and accurate terms/pricing master

• Pricing strategy customized by customer including volume discounts, rebate and payment terms

• Automated Order automatically transmitted to customer. Customer confirmation is scanned and uploaded to validate order in

ERP

• Ability to enter orders on a web front end by Client Sales Teams or Customers

• Workflow tool capturing all customer information and interactions visible to all agents

• Consistent template format to communicate with both customers and the order entry team are in place

• Real-time inventory data to sales, order entry teams, and customers are available

• Reports on price overrides are monitored and approvals are tracked. Analytics are reviewed to address productivity and business

outcomes

• Real-time visibility to pending orders is available online for all operators (Internal and customers)

Order To Cash Leading Practices Collections and Process Improvements

Other leading practices by Business Vertical can still be implemented depending on Client

positioning within maturity curve (Basic – Intermediate – World Class)

• Contract requests flow through advanced workflow Tools - Document Flow Manager

• Key summary contract terms for each customer relating to pricing and payment terms to be held in contract data base

• All contracts are tracked with their start and expiration date linked to escalation workflow to senior sales management

• Contract confirmation sent electronically to all customers

• Standardized contracts with minimal deviated authorised (Exception management of payment terms included)

• Contract template are easily deployed across the whole organisation

• Hard copy contracts stored in a digital form which is indexed for easy reference and access

• Contract Management Systems are integrated in single ERP and have the necessary fields to capture key contract terms

Order To Cash Leading Practices Collections and Process Improvements

Other leading practices by Business Vertical can still be implemented depending on Client

positioning within maturity curve (Basic – Intermediate – World Class)

• One party and one defined process to be responsible for master data maintenance, access is locked for unauthorized individuals

• Standard customer master data forms available online

• New account set up confirmation provided to customers, welcome letters/emails issued to customers

• Establish multiple search mechanisms (e.g. account number, account name, phone, invoice number, etc.) in order to access

customer data. This data should be integrated seamlessly to customer account/history)

• Consolidated customer master policy which uses a standard naming/number convention and contains all essential customer

attributes including addresses, credit score, language, currency and payment terms and is a single authoritative representation of

customer data across systems

• Customer segmentation methodology in place which can capture appropriate attributes in the customer master (Strategy, Risk, Profitability and cost to serve)

Order To Cash Leading Practices Collections and Process Improvements

Other leading practices by Business Vertical can still be implemented depending on Client

positioning within maturity curve (Basic – Intermediate – World Class)

• Provide standard, automatically consolidated invoice formats which are utilized across customers, business units, geographies,

languages, and product/service lines

• Invoice layout is clear, intuitive, comprehensive, and legible when scanned

• Invoicing is done on the same day as product shipment or service delivery (where appropriate for the business model)

• Unbilled receivables are logged and managed on daily basis (recognized unbilled revenue)

• Customers able to view and process invoices electronically (Customer Portal / EIPP)

• Approvals/routing for credit memos, rebilling, and invoice adjustments are workflow enabled and reported upon

• Use electronic imaging for invoices and supporting documentation

• Deploy automated bill audit capability that samples invoices for accuracy prior to distribution. Reason codes to capture why

adjustments to the original invoice are made

• Dynamic customer segmentation and collection strategies driven by risk and payment history analytics (High Propensity To Pay

Customers and Low Propensity To Pay Customers)

• Behavioural scoring system to automatically assign treatment strategy based on historical customer behaviour, reviewed periodically

• Web-based Self Service Portal to allow customers to obtain copies of invoices, proof of deliveries, statements, pay invoices or notify

supplier of disputes

• Robust collections workflow tool including customer segmentation, collections strategies, performance management and workflow

dispute management.

• Assign best collectors (HIAS: High-Impact Action Specialists) to aged accounts management or most difficult accounts (Customer First,

Care and Focus segmentation)

• DNC and DNE (Do not call/contact and do not email) customers are an exception and agreed upon list is reviewed on monthly basis

• Split dispute Management (Resolvers) from Collections with a clear workflow in place between the two groups

• Only pay sales commissions from cash received

• Conduct monthly bad debt post mortems together with root causes of uncollected or delinquent payments to provide the basis for

developing corrective / preventive solutions

• Automated transfer of accounts to external OCAs or legal services, according to collection policy

Order To Cash Leading Practices Collections and Process Improvements

Other leading practices by Business Vertical can still be implemented depending on Client

positioning within maturity curve (Basic – Intermediate – World Class)

• Leverage a tool designed specifically for the purpose of deduction handling including the ability to identify, categorize, track, report, workflow,

escalate, and close customer exceptions

• Implement exception reporting incl. number of occurrences, financial exposure, trends, issues causing deductions and resolution performance

• Web-based Self Service Portal to allow customers to pay invoices & notify supplier of deductions

• Place deduction resolution responsibility on the salesperson

• Establish adjustment guidelines which link adjustment levels with the economic value of the customer

• Separate exception management function responsible for determining deduction reason code based on documentation and/or specific

actionable knowledge

• Perform monthly root cause analysis for deductions

• Assign clear accountabilities and timeframes for the escalation and resolution of customer deductions with some portion of compensation

linked to deduction metrics

• Resolve pricing issues before approving order and enforce a standard procedure for handling unauthorized deductions with a clearly defined

list of acceptable deductions with agreed treatment and pre authorized dollar limit allowing automated clearing without referral

Order To Cash Leading Practices Collections and Process Improvements

Other leading practices by Business Vertical can still be implemented depending on Client

positioning within maturity curve (Basic – Intermediate – World Class)

• All (new) inbound requests and inquires routed through central helpdesk/customer service team

• Call routing mechanism for incoming calls including integrated voice response (IVR)

• One single process and workflow tool (WQM) to be used to capture all information necessary to categorize, route, and resolve the

inquiry.

• Calls can be recorded and reported upon

• Route cause analysis of customer inquiries

o Toll-Free phone number for customer requests and inquiries readily available on company website under contacts and on

invoices

o Inbound contact is assigned to the appropriate team/agent according to customer segment, customer request and agent skills

o First time resolution rate at 90%

o Maximize the use of self-service using a customer portal to provide online bill presentment, online payment options, transaction

history, dispute handling, copies of documents (e.g. invoice, proof of delivery, purchase order, contract), submit requests,

answer FAQs

Order To Cash Leading Practices Collections and Process Improvements

Other leading practices by Business Vertical can still be implemented depending on Client

positioning within maturity curve (Basic – Intermediate – World Class)

• Automated cash application algorithms and OCR technology used to electronically match payments to invoices

• Fully functional web based self-serve portal (Customer Portal / EIPP) Electronic Invoice Presentation and Payment (EIPP) -

Allowing customers to view Invoices electronically and make payments, raise disputes, etc.

• 85%+ penetration of EDI, electronic billing & payment receipt

• Offer customers secure Internet payment options and mobile payments

• Electronic upload of bank statements

• Track and analyze root causes of unapplied cash to develop corrective/preventative solutions

• Automated systematic removal of small value write off backed with audit trail

• Workflow tool forwards exceptions/escalations to client and ages outstanding items

• Develop Direct Debit Penetration campaigns

• Cash tolerance levels to automatically write off underpayments within limits and periodic reviews

Order To Cash Leading Practices Collections and Process Improvements

Other leading practices by Business Vertical can still be implemented depending on Client

positioning within maturity curve (Basic – Intermediate – World Class)

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To discuss how we can support your Order to Cash Outsourcing needs, please contact:

Jamel Ziani, BPO Order to Cash Managing Director jamel.ziani@communicationcentres.com | Mobile +35 386 416 9504

Tel +27 31 538 4546 | 32 Flanders Drive, Mount Edgecombe, South Africa, 4300

CCI BPO ORDER TO CASH SUPPORTING YOUR GROWTH...

www.cci-bpo.com