The O2C cycle is often riddled with manual steps that can cause a lot of friction in between- and frustration for both the business and customers. This dramatically affects your receivables collection and, eventually, the health of your cash flow.
In our recently concluded webinar, “The 10 Gifts of Accelerated Cash Flow”, we invited Amanda Lee, Founder and Receivables Management Advisor at The Retriever, to speak with Arjun (AJ) Singh, Co-Founder and CEO ezyCollect, to discuss how you can take advantage of a streamlined and optimised O2C process through accounts receivable automation, creating a seamless cycle that not only ensures you get payments efficiently but also improve your relationship with customers. Here are the key takeaways from the session.
3 critical areas of focus in the O2C cycle for accelerated cash flow
1. Best practice credit approval
Extending trade credit is something that many businesses do manually, and this can cause a lot of issues that can lead to bad debts – affecting your cash flow in the long run. Adapting an automated and data-driven process delivers efficiencies that are beneficial for both you and your customers.
First of which is a more reliable credit check. Unlike manual application processes that primarily rely on trade references given by the customer, an online credit application system integrates credit risk scores from trade reporting agencies so you can get data-driven insights and make better decisions before onboarding customers and extending credit. Having this data at your fingertips gives you that professional knowledge without much effort, and you’ll be able to manage risk right from day one, making that goal of accelerated cash flow much easier.
Another benefit of online credit applications is a better onboarding experience. First impressions last, as the adage goes, and that couldn’t be farther from the truth in business relationships. Onboarding customers in a disorganised, time-consuming process that are prone to error reflects an unprofessional image on your part – inadvertently sending the message to your customers that they can cut corners as you do. By digitising a credit application, you create a streamlined and automated process that not only benefits your operational efficiency but also means you mean business, and customers need to be in that same level of credibility too.
2. Humanised automation
Humanised automation seems contradictory, but part of reducing your overdue accounts hinges on this balancing act of human connection and automation. Automation creates communication efficiencies in accounts receivables, paving the way for a more personal approach to customers that need it the most.
With an automated communication workflow, you don’t have to physically communicate with everyone, but you’ll be able to focus on customers that need more. An AR automation platform tells you who those customers are through consolidated credit and risk data, providing you with that opportunity to connect and build relationships. To truly understand why your customers’ payment behaviour changed, there has to be human interaction involved. You can work with them to resolve blockers preventing them from paying you on time. It’s about continuing that cycle to sell, and having a receivables ledger that’s 100% collected each month and clear, persistent, and personalised communication with your customers is going to help you achieve that.
3. Frictionless payments
Getting your payment on time is the goal of an optimised O2C process. It is crucial then to make this part of the O2C cycle as pain-free as possible, allowing your customers to pay at a time convenient to them through various payment methods that they can choose from.
An online payment platform is designed to do just that, not only as a portal where customers can pay you but also includes their statements, so they no longer need to contact you, especially when making the payment after office hours – all the information they need is readily available to them. By creating convenient pathways for payment, you can get paid easily and quickly.
The gifts of accelerated cash flow
As we’ve learned thus far, an accelerated cash flow is very much possible thanks to accounts receivable automation. While an improved cash flow is the end goal of automation, optimising the O2C process also comes with its benefits.
1. Greater business intelligence
AR automation gives you access to data and gives you the insights to make better decisions that can affect the health of your business.
2. Business continuity and data integrity
AR automation resolves cash flow issues, as we now know. With an improved cash flow, you’ll be able to run and grow your business the way you want to.
3. Sharpen your focus
Automation gets all the repetitive tasks done, so you can hone in on strategy-related tasks that further your business.
4. Shore up customer trust
Automation ensures consistency in processes and clears communication pathways – both of which allow you to build trust with your customers and, in turn, foster customer loyalty and growth.
5. Customer Perception
Digital, automated processes are now the norm and what your customers expect. Adapting automation in your business creates a professional image and aids in brand equity.
6. Lowered DSO
Automation streamlines your O2C cycle, removing any friction between processes so you can get paid promptly.
7. Error reduction
AR automation minimises the need for manual entries, reducing errors. Its capability to integrate with your ERP also means there’s no double-handling of data that can lead to more problems in your accounting.
8. Time savings
Leveraging an account receivable platform removes the need for manual processes, saving your staff tons of time. The amount of time saved can then be used to focus on more high-value work that can grow the business.
9. Gain real-time visibility
With an AR automation platform, you can get a live view of credit risk scores to be confident in making decisions based on current and accurate data.
10. Enhance efficiency across the business
While AR automation improves the collections processes of your receivables, this also translates into improvements across business functions and teams.