| We know that everyone's on the lookout for | | | | the other end of the phone and look to take |
| O2C wins, especially in still-turbulent times, so | | | | simple and non-provocative steps towards a |
| SSON asked network members to share their | | | | mutually satisfactory conclusion. |
| thoughts on the best ways to ensure such | | | | "Ensure that the first collection call to the |
| unobstructed O2C perfection. The responses | | | | customer is proactive," recommends Shanahan. |
| made for some very useful reading – so | | | | "Proactive calling helps to highlight disputes at an |
| without further ado we present Top Ten Tips for | | | | earlier point and can be the best aid to the early |
| an Optimal Order-to-Cash Process. Enjoy… | | | | signs of customer risk. In these difficult times, it is |
| 1. Know the customer | | | | worth reviewing the quality of outbound calls to |
| It's easy to get carried away with process | | | | customers. Many collectors will need training |
| efficiencies and technology-enabled savings – | | | | particularly on dealing with difficult customers." |
| but at the end of the day it's crucial to keep sight | | | | 7. Get strict on dispute management |
| of the most important element in the | | | | With the above in mind, and even with the best |
| order-to-cash chain: the customer. Maintaining | | | | team in the world in your corner, sometimes |
| optimal relationships requires solid and reliable | | | | there's no avoiding a falling-out: some people, and |
| information on what exactly each customer is | | | | some situations, are just too inflammable. If this |
| worth to the business – and how much it | | | | occurs, make sure you don't take any of the fire: |
| costs. Regularly updated and analyzed, this data | | | | no matter what the other side says or does, |
| will help keep your O2C function focused on what | | | | stick to a formalized and rigorously stress-tested |
| really counts as well as ensuring as holistic as | | | | dispute management process. Needless |
| possible an approach to customer relationship | | | | provocation needn't provoke - and shouldn't as |
| management through the business. | | | | long as requisite levels of professionalism are |
| "Do not start just with orders, but customers," | | | | maintained – and if the other side wants to |
| says Atos Consulting's Sachi Fujii-Bautista. "Your | | | | throw toys out of the pram, well, as long as |
| finance Shared Service Centre may not have a | | | | you're playing it by the book it's not your problem. |
| sight of customers while dealing with tons of | | | | "This is quite a sensitive process within the |
| papers (issuing invoices and credit/debit notes). | | | | order-to-cash process. Therefore, the rule for |
| But it is critical to have a sense of value of each | | | | handling this process needs to be carefully defined |
| customer (even a sheet of paper), not just in | | | | and roles and responsibilities need to be |
| view of annual gross sales, but overall profiles of | | | | established with an intention to regain and maintain |
| customers (profitability, number of complaints | | | | good customer relationships for the future, not |
| disputes, returns, your firm's overall account | | | | just for ‘now'. It is also critical to make this |
| strategy, etc.). I have come across one SSC | | | | process as transparent as possible for customers |
| which was dealing with a well-known retailer. The | | | | as well as internal stakeholders. This process is |
| perception of the SSC agents was that the | | | | normally time-consuming and to be honest it is |
| retailer was one of the top customers based on | | | | not pleasant. Identifying causes of typical disputes |
| sales volume, but after a customer profile | | | | and preventing the process from reaching this |
| analysis, it turned out that it was not necessarily | | | | stage would make much more sense I think!" |
| the most profitable customer due to lots of | | | | 8. Get the dunning down pat |
| returns and complaints - the total cost of dealing | | | | Whatever the state of communications between |
| with the customer was much higher than | | | | yourself and an errant customer, the I's need to |
| expected. Feeling the weight of each paper while | | | | be dotted and the T's crossed. Ensure you have a |
| dealing with tasks and handling it appropriately in | | | | clear, compliant dunning procedure in place from |
| view of the customers' true value to the | | | | the start of operations and test the system |
| company does make sense. This also leads to | | | | regularly – and make sure your team, as well |
| defining and implementing an appropriate | | | | as your software, know precisely what should be |
| corporate-wide customer relationship strategy." | | | | done at each stage, and why. |
| 2. It's a risky business (so know how risky) | | | | "Make sure that promises to pay are recorded |
| Keeping up to speed with your customers also | | | | and followed up when not fulfilled," Shanahan says. |
| helps when it comes to looking at risk. In | | | | "While most companies have an escalation |
| economically straitened times a true understanding | | | | process, it is important to do exactly what you |
| of risk and exposure is indispensable and this has | | | | promised. Otherwise the value of overdue debt |
| to be founded within the order-to-cash process. | | | | will grow and grow. For those customers that are |
| Learning to identify – and taking steps to | | | | not called, there must be an effective and strict |
| mitigate against growing risk at the customer | | | | dunning cycle. If there is a sequence of letters it is |
| level is an area where O2C practitioners can really | | | | worth considering reducing the number of letters |
| show their worth to the organization and will | | | | or reducing the time lag between each step." |
| continue to be so throughout the downturn and | | | | 9. Remind the organization: it's about you too! |
| beyond. This doesn't necessarily have to involve a | | | | Running O2C from a shared services organization |
| full health-check every week, but a closer look on | | | | has its advantages but it isn't a miracle cure-all |
| a more regular basis than what was being | | | | – so make sure everyone knows that. While |
| conducted in the boom times would be a start… | | | | you understand that a great deal of work still |
| "Managing credit risk has become more important | | | | needs to be done outside the SSO, the business |
| than ever," says Brian Shanahan, senior director | | | | at large might not be aware of its retained |
| at REL. "The credit insurers and ratings agencies | | | | responsibilities, and it's your responsibility to get |
| have largely failed the business community and it | | | | that message out – because the process can't |
| is time to re-learn the basic skills of managing | | | | be optimized without the necessary efforts |
| credit risk. Most companies have a lot of | | | | outside your own domain. |
| information to hand in the form of customer | | | | "Typically most of the real issues in the |
| interactions where they fail to recognize the signs | | | | order-to-cash process are caused in the |
| of increasing customer risk." | | | | upper-stream, not within SSC," says Fujii-Bautista. |
| 3. Keep the sales team risk-aware… | | | | "Wrong terms being set with customers, wrong |
| The sales floor is the engine-room of the business | | | | prices in sales agreements, customers credit limit |
| – and as such, as any mechanic will testify, it's | | | | exceeded without any notice, goods actually |
| where a lot of things can go very wrong indeed. | | | | returned (and customers made a complaint due |
| OK, so everyone knows times are tough and | | | | to inappropriate chase for payment for returned |
| getting those deals in might be harder than it's | | | | goods), etc… Tackling order-to-cash issues just |
| been for a long, long time – but you've got to | | | | within SSC would not dramatically improve the |
| do what you can (even from what might at | | | | process performance. Having said that, just |
| times seem like a very long way away) to make | | | | tightening the belt within SSC could make quite a |
| sure your sales team aren't hamstringing the rest | | | | difference, but what I am trying to say is having |
| of the company when it comes to the | | | | a collaborative approach with sales could make a |
| agreements they're making with customers. Try | | | | miracle in the order-to-cash process! In most |
| to get the sales managers to keep their teams in | | | | cases I worked on, revenue leakages were not |
| line on areas such as payment terms: obviously | | | | truly recognized in the organizations in a broader |
| the more homogenous these terms the easier it | | | | sense as the order-to-cash initiative was dealt |
| becomes to ensure a smooth O2C process (and | | | | with by just Finance communities." |
| vice versa…). | | | | 10. Get the buy-in (from everybody) |
| | | | | Collaborative working is the future – both |
| "It is essential that in these hard times that the | | | | within the organization and without. Obviously it's |
| sales force are not giving away payment terms in | | | | crucial to have senior sponsorship (always high on |
| an uncontrolled manner," urges Brian Shanahan. | | | | the wish-list) and to leverage it effectively – |
| "While there may be selective cases for | | | | but getting true support from all stakeholders, not |
| extending terms, this is not the time for a | | | | just the board, is increasingly important. Proper |
| wholesale giveaway." | | | | communication and, where appropriate, change |
| 4. …And make sure risk policies are adhered-to | | | | management – approached from an |
| from the startIn a perfect process there are no | | | | end-to-end perspective – are an absolute |
| corners to cut – and that applies to | | | | must-have to get full engagement from all actors, |
| customers just as much as to your own | | | | within your SSO as much as within the wider |
| organization. If the sales team is on the case | | | | organization. And include your customers among |
| from the beginning as far as risk is concerned, | | | | your stakeholders; consultation about possible |
| then every other element of the process should | | | | transformations, or even just general customer |
| be as well. Have a single coherent risk plan and | | | | relationship management, can result in input which |
| then ensure it's applied as end-to-end as possible | | | | can itself help in the optimization process. |
| – and that means increasing the priority of | | | | * |
| credit-checking. | | | | A comment to this article after it was published |
| "Suppose your SSC has established | | | | from Gerry Dempsey PIIA FRSA , Chairman and |
| company-wide credit policies and is dealing with | | | | CEO of Dempsey Group |
| credit evaluation in a consistent way," says | | | | Tell the client what your credit terms are, what |
| Fujii-Bautista. "But sometimes having a policy does | | | | the ramifications are for non-compliance and |
| not mean it is compliant in reality. How the defined | | | | HAVE THE CONVICTION TO FOLLOW |
| policy is implemented and monitored is an issue. | | | | THROUGH!! |
| Your sales unit might have sold a big deal with a | | | | This is simple to do with new clients in a B2B |
| customer who has got unpaid invoices and it | | | | market where you can establish the boundaries in |
| might be the case that its defined credit limit is | | | | advance of providing the service. But it is more |
| already over. It is advisable to implement the | | | | difficult to do for existing clients with whom you |
| process that the credit limits can be checked | | | | have tolerated bad behaviour. For example, during |
| against a number of things such as latest | | | | initial meetings with new clients we set the |
| credit-worthiness ratings from organizations like | | | | expectation that we manage our cash quite |
| Dunn and Bradstreet, or look internally at invoice | | | | closely and that by managing this risk we are able |
| payment performance etc and dynamically set | | | | to keep costs low for all our clients. During |
| new limits without the need for manual | | | | subsequent meetings we discuss this in more |
| interference - and stop the order if appropriate." | | | | detail with them so that they fully understand the |
| 5. Smooth out the collection process from the | | | | consequences of not paying on time. Depending |
| front | | | | on the risk factor and the client profile we treat |
| The sales team won't like it, but the more | | | | clients in one of two ways: |
| responsibility for collection that can be front-loaded | | | | 1. We suspend the service immediately and do |
| into the sales process, the better for the rest of | | | | not resume until payment has been made |
| the system - up to a point, of course. The more | | | | 2. We add x% interest per day on the invoice |
| successfully your team can make it their business | | | | amount but if the invoice is not paid within 2 |
| to follow up the cash their contracts are securing | | | | weeks we suspend the service. |
| – with suitable incentives, of course – the | | | | If clients repeat a pattern of not paying on time, |
| fewer the wrinkles that come down through the | | | | and if our escalation of the issue is not successful, |
| process. | | | | we terminate the business relationship. |
| "I meet good sales guys who told me ‘cash | | | | ______ |
| collection is part of my sale'," says Fujii-Bautista, | | | | This article was first published on the Shared |
| "while I also meet sales guys who do not care | | | | Services & Outsourcing Network (SSON) - |
| about cash collection as they can claim ‘sales' | | | | Read it here: |
| for his or her performance. There are more | | | | About The Shared Services & Outsourcing |
| companies which started setting up a KPI on cash | | | | Network (SSON) |
| collection/DSO against sales people as it is | | | | SSON is the largest and most established |
| fundamentally true that sales only, does not give | | | | community of shared services and outsourcing |
| cash for the organization! It is important to set | | | | professionals, with over 25,000 members. |
| appropriate KPIs for all the stakeholders who get | | | | SSON provides the roof under which key industry |
| involved in order-to-cash processes and develop | | | | experts and organizations share their experience, |
| an appropriate rule on who to contact whom for | | | | knowledge and tools, and practitioner peers |
| what profile of customers. The way you want to | | | | connect with other all over the world, both face |
| handle this process must be quite different for | | | | to face and online. |
| customers which are giving you a seamless | | | | SSON focuses on developing its members through |
| cashflow to the ones which have got blockages in | | | | providing training, tools, and networking |
| the flow." | | | | opportunities. SSON staff works from international |
| 6. Diplomacy is at a premium | | | | offices in New York, London, Singapore, Sydney, |
| With markets still jittery it's easy to panic | | | | Berlin and Dubai to research current trends and |
| already-stressed debtors, and personal contact, | | | | developments in shared services. |
| while increasingly important, becomes | | | | More information visit the Shared Services & |
| consequentially more important to get right. | | | | Outsourcing Network (SSON) website. Stay up to |
| Remember things might be an awful lot worse at | | | | date with SSON's latest twitter posts at twitter. |