The CFOs Guide to Digital B2B Payments

The CFOs Guide to Digital B2B Payments

by | Apr 28, 2022 | Blog

Digital payments are the key to unlocking optimisations in payment transactions. Digital payments have been the way for many B2C transactions for years but haven’t gained the same prevalence in the B2B space until recently. With the COVID-19 pandemic accelerating e-commerce and increasing customer expectations toward using technology, B2B organisations will inevitably march toward digital payments.

But the march has been slow – the reality is not many companies have adopted B2B payment automation yet. A study published in the Next-Gen Digital Payments Report shows that 51% of the B2B respondents are yet to digitalise their accounts receivables and accounts payables, which means more than half of the respondents do not have a solid payment digitalisation plan.

Here, we discuss what digital B2B payments are, the challenges of B2B payments and how you can start to leverage digital technology to improve your payments process. 

Contents

  1. What are Digital B2B Payments?
  2. B2B Payment Methods
    1. 2.1   Paper cheques
    2. 2.2  Direct Debit
    3. 2.3  Wire Transfers
    4. 2.4  Credit Cards
  3. B2B Payment Terms
    1. 3.1  Instalments
    2. 3.2  Milestones
    3. 3.3  Net Terms
  4. Challenges of B2B Payments
  5. Benefits of Digital B2B Payments
  6. Steps to digitalise B2B Payments
  7. Transform B2B Payments
 

What are Digital B2B payments?

Any payment or receipt of money for goods or services made between two businesses using an electronic medium is a digital B2B payment. B2B payments can be a one time or recurring transaction depending on the contractual agreement between the buyer and supplier.

Digital B2B payments include online payment platforms and use technologies such as APIs for integration with other software and automation to streamline workflows. Advanced technologies such as blockchain and artificial intelligence (AI) are also making their way into the B2B space. It won’t be long before we see these technologies further redefine digital payments.

Economies worldwide recognise the importance of digital technology in improving business efficiency and profitability. In Australia, the latest tax break incentive for businesses adapting digital technology – including payment systems – emphasised just how crucial it is in building healthier businesses.

Additionally, giving your B2B clients an automated payment system will ensure you:

  • Receive your money on time, every time. 
  • Protect your financial details and the safety of your clients. 
  • Have less to worry about defaulters. 
  • Have sufficient funds to ensure you can supply your goods to your buyers.

 
Related blog post: Modernizing B2B Payments For the New Normal
 

B2B payment methods

There are different options available for businesses regarding payment receipt methods. Here are the most-commonly used B2B payment methods with their pros and cons.

Paper cheques 

Paper cheques are still one of the most popular payment methods today. It is much safer than direct cash transactions, and they are also the easiest to adopt – being used for years as a standard B2B payment method.

Pros:

  • Cheques are a great way to encourage conservative or old-school companies who haven’t digitised yet, to do business with you.
  • Since cheques don’t charge convenience fees, they will be inexpensive for your clients.

Cons:

  • Clearing a payment using cheques is time-consuming.
  • Start-ups and businesses run by millennials and younger cohorts may not be as familiar or interested in paying you through paper cheques because they’re accustomed to digital payment systems.
  • Both the paying and receiving companies need always to keep a minimum balance at all times.

Direct Debit

Direct Debit authorises another party to collect payments from an account when they are due by completing a Direct Debit Authority Form. Direct Debits are used for any kind of payment, but it’s most often used as a safe and convenient way to make recurring payments.

Direct Debit used to be the privilege of bigger and more established businesses with many customers, but technology has democratised and simplified the systems involved. Now any business – big or small – can benefit from the Direct Debit payment’s speed, convenience, and security. 

Pros:

  • Automatically collects payments from customers, so payments are never forgotten or delayed.
  • Direct Debit payments integrated with your accounting system can save you a huge time in reconciliation.
  • Cost-effective – Direct Debit transactions fees are much cheaper than credit card fees which charge around 3-5% for transactions.

Cons:

  • Possibility of payments not being collected due to insufficient funds.
  • There’s a certain level of trust required for customers to authorise direct debits. Customers might need some time to feel comfortable approving suppliers to collect automatic payments. 

Wire transfers

A wire transfer is a bank transfer wherein your client has your bank account details, and they make the payment directly from their account to yours. 

A wire transfer is different from a Direct Debit in that it is not limited to the currency of a business’ local banking system. Wire transfers are also usually processed within the same day, whereas Direct Debits can take a couple of days.

Pros

  • Wire transfers help you receive same-day payments.
  • You can receive wire transfers from both domestic and overseas bank accounts.
  • Wire transfers are safe, and you can track your receipts using the ID generated for each transaction.
  • For businesses dealing with international clients, wire transfer payments can easily be converted to your local currency.

Cons

  • Wire transfers are expensive compared to ACH or Direct Debit due to processing fees, service tax and foreign currency conversion fees (if applicable). 
  • If your client wants a refund, you will be unable to reverse the transaction.
  • If your payment receipt transaction ID becomes known to someone else, it is easy to manipulate the wire transfer.

Credit cards

Credit cards are a borrowing mechanism that banks give both B2C buyers and B2B companies. Any business using a credit card can borrow money from their bank to make payment to you for the products/services they have purchased from you. But you will always be assured of your payment since the bank pre-pays you on your buyer’s behalf.

Many banks offer credit cards that are specifically designed for business payments. These cards also offer desirable deals that enable users to waive certain fees, earn bonus points, allow business savings and avail of a cash advance facility, amongst other features. 

 

Pros

  • Easy set-up for suppliers and adaptable to digital payment platforms
  • Convenient to use for your clients.
  • You receive payments quickly since your clients borrow money from their bank to pay you.
  • Banks always share a credit card receipt report with their B2B clients, helping you track who made payments to you and when. You can also identify any clients who have defaulted their payment to you.

Cons

  • Merchant fees can be expensive. However, there are online payment platforms that will let you surcharge the fees at checkout, or absorb all or part of the fees.
infographic of b2b payment methods

B2B Payment Terms

B2B Payment Terms sets the payment agreement between you as the supplier and your clients. While creating a standard agreement across all of your clients is ideal and is the simplest option, the reality is each of your clients may require different terms depending on their financial situation.

Instalments

Instalment payments allow your customers to choose a plan and pay in portions rather than paying full price up-front. With this agreement, you can receive consistent payment amounts to your business over the time period you’ve agreed upon, thereby reducing your financial risk by not waiting for your client to pay the total amount.

You can sync your instalment payments to a milestone met. We’ll touch upon milestone payments later in this article. But to illustrate, let’s say you receive the first instalment of your entire bill when you deliver the first batch of raw materials to your clients. Then you continue to receive each instalment as subsequent deliveries are made. You can choose even to charge interest on instalments, but that’s not mandatory. An equated monthly instalment (EMI) is an example of a commonly-used B2B instalment scheme.

Instalments are essentially a flexible payment method and can help with customer retention. You can offer your clients the payment technologies mentioned earlier to make each instalment payment.

Milestones

Milestone payments are frequently used in the services industries and help buyers build trust with suppliers. Payment upon delivery is a good example of milestone-based payment. For suppliers, milestones help you retain your end of the deal—you receive the payment only when you make any progress to the service/product you have to deliver.

Net Terms

In B2B transactions, it’s common for suppliers to extend their payment terms to their customers – called Net Terms. Net Terms allow businesses to pay for orders within a certain period after invoicing instead of paying it upfront.

The most common set-up is for businesses to be allowed to pay 30, 60, or 90 days after they receive goods or services, with no interest. From a buyer’s perspective, this can be beneficial to their working capital as they have a chance to resell goods or to use the raw materials for manufacturing and send the goods to distributors before the bill is due. Some suppliers may even offer discounts if the invoice has been paid before they are due.

As net terms are important to buyers, it will do well for suppliers to offer them. Suppliers benefit by providing a more attractive payment scheme, thus improving customer retention, and that is reflected in an improvement in sales and an increase in order volume.

However, Net Terms can also affect the supplier’s cash flow. The supplier must monitor payments via Accounts Receivable automation to ensure that payments are made on time as agreed upon by the two parties.

Challenges of B2B Payments

Choosing a B2B payment option isn’t always easy. Here are a couple of challenges that you need to look out for when evaluating which B2B payment method to offer your customers:

  1. Interoperability between businesses – Check if the payment method is compatible with your client’s preferred method. Or, select two or more payment methods that can support all of your current and future clients.
  2. Security issues – When receiving money, your payment method should offer you and your client security. It’s best to check what security features each method offers before selecting one.
  3. High transaction fees – Depending on the payment method, your transaction fees can range from 2% to 5% per transaction. This may drive away budget-conscious buyers who don’t want to pay these processing fees. 
  4. Lack of visibility and efficiency – Some payment methods aren’t transparent, and it can be hard to identify which stage of the transaction your payments are in during processing periods. 
  5. The disparity in fund payment days – While some payment methods offer a 24-hour payment cycle, others can take up to 30 days to clear. It can be challenging to keep track of what is owed to you and when you may receive it.

To address the issues surrounding B2B payments, the efficiency and reliability of systems used are essential, and the ability of payment systems to accept various payment methods.

 

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Benefits of Digital B2B payments

Understanding the nature of B2B payments and the issues that can arise during transactions has paved the way for B2B payment automation. And with digital technology becoming more sophisticated yet accessible, automation takes a step further with digitalisation.   

Indeed, Digital B2B payments are increasingly becoming the payment method of choice for many businesses in today’s economic landscape. Here’s why:

  • B2B digital payments involve self-service platforms for customers, which they can use to pay invoices irrespective of their location and the time.
  • Modern B2B payments automation technology has safe authentication measures. From credit card pins to 2FA on mobile/desktop payment management apps, you can safeguard the financial privacy of your client and yourself.
  • Digital transactions are easy to track, with payment details stored in easy-to-access databases – reducing duplication and ambiguity.
  • Digital B2B payments are less expensive in the long run. Processing fees associated with B2B digital payments are low compared to traditional payment methods like paper checks.
  • Automation helps you maintain good relations with all of your stakeholders because of the ease, efficiency, and promptness of digital payments. 
  • Many digital payment systems integrate with AR automation software that can generate detailed reports about your financial health. You can use these reports to gain insights regarding customer payment behaviour to help your collections strategy.

 
Related blog post: Top 5 B2B Payment Hacks for Digitising Your Business
 

Steps to digitalise B2B Payments

According to new predictions made by FIS in the latest Global Payments report, only 2.1% of payments will be made by cash in Australia by 2024.

There’s no doubt that there is an ongoing shift toward digital payments. With the benefits accompanying it proving to be substantial, now is the right time to start planning how you can digitalise your payments. Here are some tips to help you get started:

  1. Think of your B2B payments experience as a B2C experience. Consider what people may prefer in a payment system and try to make it happen for your B2B needs. Features such as a digital ‘Pay Now’ button on your invoices and SMS reminders can make the payment experience better for your clients.
  2. Identify the nature of your B2B payments system. Figure out what may need changing and how you can improve your payments management system. For instance, you may need payments to automatically write back to your ERP so you don’t have to worry about reconciliation. Also, identify what you wish to retain from the old system if it is good.
  3. Think of which payment methods your clients are most likely to use and try to offer multiple payment methods. Some clients might prefer credit card payments, while some may prefer a direct debit payment. The easier it is for them to send payments, the more likely they will do business with you and pay you on time.
  4. Make available digital offers that provide your clients with the buy-now-pay-later options, helping you improve client loyalty. Consider financing solutions to offer to your clients for them to be able to complete payments.
  5. Implement identity-management protocols and premium security measures to safeguard your payment system users.

Transform B2B Payments with ezyCollect

Contact an accounts receivables automation expert to help customise a digital payment system for your business. Book a free demo of ezyCollect and discover how AR automation and B2B digital payments can work for you.

10 Hacks For Optimising The O2C Process For Your Business & Accelerating Cashflow

10 Hacks For Optimising The O2C Process For Your Business & Accelerating Cashflow

by | Feb 8, 2022 | Blog

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.

Watch the webinar

Learn more about optimising your O2C process. Watch the entire webinar for insights from Amanda and AJ. Join our mailing list to receive invites for future webinars.

How to Transform Your B2B Business With an Order 2 Cash Platform

How to Transform Your B2B Business With an Order 2 Cash Platform

by | Jan 14, 2022 | Blog

Cash flow is the lifeblood of any business – without it, the business will eventually fail. A consistent cash flow can only be attained if your order to cash cycle is fine-tuned. For B2B companies, in particular, ensuring all account receivables are collected in a timely manner is essential to increase liquidity. However, often times businesses do not pay enough attention to their order 2 cash cycles until they hit a roadblock.

So what is the order 2 cash cycle, why is it important to B2B companies and how can an order to cash platform help? We have all the answers for you, so read on.

What is the order-2-cash cycle?

The order-to-cash cycle encompasses the series of activities involved in making a sale, starting with receiving an order and culminating with the point of payment and invoice receipt. Although the process may seem relatively simple, it is actually a lot more complex. Companies often focus all their attention on securing an order from a client, but B2B payments are not given the attention they deserve. This makes the order to cash cycle longer for the business, delays revenue generation, and impacts the overall financial performance of the business.

The usual stages of an order-to-cash cycle include the following-

  1. Order entry – Entering the order, collecting and storing all related data
  2. Credit – Analysis of customer’s portfolio and risk assessment before deciding on a credit limit
  3. Order fulfillment/ returns – Checking product availability, confirming the order, dispatch, tracking delivery, and managing returns when necessary.
  4. Order billing – Calculation and verification of bill
  5. Collection – Accounts receivables collection, cash generation, and reporting, and bad debt write-offs
  6. Cash application – Cash posting, deductions management, account reconciliation, and discrepancy resolution
  7. Dispute management – Third-party complaints and customer disputes management

As evident from the stages listed above, the order to cash cycle does not end with the payment receipt. It involves certain critical activities even after the accounts are reconciled.

The order-to-cash process needs to be refined, but it can be difficult to find a comprehensive solution that can optimize this procedure. However, businesses today are learning to utilize technology in this area too. With a host of integrated software solutions, companies are learning to improve the various activities involved in the order-to-cash process.

Why is the Order-2-Cash cycle important to B2B companies?

Unlike other business functions such as marketing or sales, the order-to-cash process does not operate on the surface and is more of a background process. However, this process still has a huge impact on the company’s performance. Not just that, it can impact a business’s customer relations too. An optimized order to cash process improves the customer’s journey from the moment the order is placed. As the process involves every function after this point, including order confirmation, dispatch, and even returns, a well-managed O2C cycle ensures a hassle-free experience for customers.

The entire process from order placement to invoice receipt involves several teams within a company. Departments including marketing, pricing, sales, finance, warehousing, collections and more, should work in sync with each other to ensure efficiency of O2C process. This expansiveness of the order to cash process is what makes it so complicated. With so many functions and teams involved, making changes to the process becomes a true challenge.

The order to cash process affects various operations throughout an organization, from supply chain management and logistics to inventory management and more. An optimized order to cash process means that all of these different operations involved are working at an optimum level. On the contrary, a bottleneck in any one of these business areas will affect the entire order to cash process.

One of the major reasons why optimizing the O2C process is essential is it’s role in a healthy cash flow. The O2C process determines the cash flow in the business through invoicing and accounts receivable functions. Any significant delays in invoicing or collection can affect other areas of your business’s finances like accounts payable, salaries, business loans, probable acquisitions, or any other activity that relies on the company’s liquidity.

Although there is an evident need for a digital solution that can optimize the order-to-cash cycle, it is not possible to have an off-the-shelf software solution that can take care of the entire process as one. This is because the process can be dynamic. There is no one-size-fits-all approach here, as the O2C process can differ for different industries, products, companies, locations, or customer segments.

An order to cash platform that has the capability to unite all related functions is seen as the ideal solution. An open platform provides the flexibility needed by the O2C process through integrated applications and technologies.

What is an order to cash platform?

An order-to-cash platform is a technological solution that allows for a streamlined process for B2B businesses to bring all the functions involved in the O2C cycle together. This is possible through integrations of various applications that readily exchange data to ensure the entire process runs smoothly from start to finish. These seamless connections ensure payments are collected faster and disputes are resolved quickly, so that customers can find a reason to remain loyal to the brand.

The best way to optimize the order 2 cash process is by ensuring that the related functions can easily exchange data and information for every transaction. For this to occur, technology is a crucial factor. Interconnected applications that allow different functions to have access to real-time data boosts productivity in the order to cash process. Technology also has other benefits, like digital invoicing capabilities or accounts receivable automation.

An organization that runs on a platform-based structure can brave these challenges by building platforms that utilize the power of both the human workforce and the technological tools. They combine modular data and technology architecture to create scalable solutions that are handled by agile front-end teams.

An efficient and modern O2C platform should have a front-end team, an underlying support team, and a modular infrastructure of applications and tools. This entire ecosystem needs to be flexible to instantly pivot to meet both the organization’s and the customers’ changing demands.

Front-end team

The front-end team in an O2C platform is a multi-functional team that directly deals with the customers to ensure seamless orders and payments while delivering a frictionless experience for the customer.

Support team

Supporting the front-end team is a well-defined structure of agile teams that work on the back-end using digital tools and applications and effectively manage end-to-end processes to deliver the order to cash services.

Modular infrastructure

At the base of it all is the technological infrastructure that completes the ecosystem. The tools and applications are necessary to manage all the different functions related to the order 2 cash cycle. Examples of such applications and capabilities include CRM software, customer service platforms, AR automation platforms, automated workflows, among other things.

How can an order-to-cash platform help your business?

A comprehensive order to cash platform brings numerous benefits to your business – right from analyzing data, increasing sales, and providing automated transparency to customers at the time of invoicing to payments. An O2C platform can provide a unified processing capability that helps deliver faster turnaround times for customers and the front-end teams.

A unified O2C platform also ensures data consistency and accuracy across the various functions in your business. The flexible modular architecture of individual applications and platforms enables repeatable processes. It also ensures that you can add new applications and platforms to the ecosystem as the need arises.

Key benefits of an order-to-cash platform for businesses

An order-to-cash platform can address many of the pain points that a business faces in optimizing its order 2 cash cycle.

  • Client facing platforms help deliver value to interactions with customers and help enhance the customer’s buying experience.
  • AI and machine learning-powered platforms help identify common challenges faced in the O2C process by detecting patterns
  • Modular data and technology architecture helps deploy new applications easily as and when required
  • A platform that allows for easy integration with all the related applications can reduce the complexity of the O2C process and help you respond to customer needs better
  • Data moves in both directions among interconnected applications, enriching the connections between various functions and departments. Such integration of data streams creates greater transparency in the whole process for all users
  • Workflow management is made easier through automation and accessibility to data
  • Integration to various accounting software like MYOB, SAP, Pronto, Attache, etc. can bring together all your financial operations for greater visibility into the process
  • An effective O2C platform can also help increase employee satisfaction by reducing the amount of repetitive work through automation and minimizing complexity

How to implement an order to cash platform in your business

Now that we understand why a cash 2 order platform is beneficial to your business, it is also important to know how you can implement one to manage your B2B payments and the O2C process overall. Like all other initiatives you take in business, deploying an O2C platform for optimizing your order 2 cash cycle requires measurable goals before anything else. Having your goals set will give direction to your efforts.

Setting Goals

For most organizations hoping to optimize their O2C cycle, there are three measurable goals in general.

  • Reducing the cost per order – This goal is usually measured in terms of the labor cost involved in fulfilling each order or the number of orders fulfilled per employee. It may also be assessed in terms of the share of automated transactions. Essentially, the lower the cost of labor or the greater the number of orders handled by each employee, the better. Similarly, if the share of automated transactions is greater, the process is considered to be heading towards optimization.
  • Reducing the number of days’ sales outstanding – Almost every business area can benefit from process optimization, which seeks to minimize the time needed for processing. In this case, our focus is on minimizing the amount of outstanding sales. The shorter the duration from order placement to completion, including account reconciliation and dispute resolution, the more efficient is your O2C process. Capabilities like e-invoicing, accounts receivable automation, automated workflows, automated cash application, etc., can help reduce the cycle time.
  • Increasing customer satisfaction – The majority of the improvements that a business can make are usually focused on enhancing the customer experience and heightening customer satisfaction. The O2C process is no different in this regard. By minimizing errors in invoicing, delivery or pricing, and closing deals faster, customer satisfaction can get a boost.

Platform design

When designing your order to cash platform, three essential characteristics can ensure efficiency and effectiveness. These three characteristics are –

Easy integration

The platform’s architecture has to be such that it easily integrates with your existing internal applications, external applications, and any new application you may need to add in the future. Integration is the key to success in an O2C platform. An effective order to cash platform allows both internal applications of the organization and applications used by third parties to run together seamlessly.

This ensures that the ecosystem created is barrierless and that there is free, unrestricted data flow wherever necessary.

Customer-focused solution

Introducing customer-centric solutions can make your order to cash platform far more effective. Leveraging technology to offer customer-facing solutions, like self-service capabilities, order tracking, payment requirements, and such can help improve the customer experience further. It can also reduce the order 2 cash cycle time as the manual intervention required is minimal.

Distributed responsibility

The O2C platform cannot be the responsibility of a single team or a single department. As the process itself involves multiple functions throughout the organization, the responsibility has to be shared among various teams. So any time an issue arises, it should be clear who is responsible for tackling it. Also, there has to be a process owner to distribute responsibilities across functions. This will ensure that the platform is not fragmented and there is no scope for confusion or mistakes, irrespective of the volume of client interactions on the O2C platform.

Challenges

In implementing an order-to cash platform in your business, you may face a few common challenges. Some of the most likely challenges that almost every organization faces in its efforts to optimize the order 2 cash cycle are –

  • Getting buy-in from all the relevant functions and top executives. An O2C process owner can bring all the functions together to agree to the initiative unanimously.
  • Creating end-to-end solutions that create tangible value for all. All business functions and stakeholders involved need to benefit equally from the solution.
  • Convincing decision-makers to invest in the initiative, as the ROI is certain but slow. The gains from this initiative are only seen over time, but the revenues generated once the ROI is realized are usually ten times greater than the investment.
  • Training employees for the disruption that the O2C platform will bring about. Organizations that take on change management initiatives before implementing O2C platforms are better positioned to handle the transformation.

Conclusion

Receiving B2B payments on time is only one of the many advantages of having an effective O2C platform. Optimizing the order 2 cash cycle in a business can bring better cash flows, increase process transparency, and enhance customer and employee experiences. With new insights from the integrated data across applications, more informed decisions can be made in sales and other areas of the business. If done right, an order to cash platform can be an invaluable addition to your business.