Topics: Order-to-cash cycle

How Order to Cash Outsourcing Helps You Master the O2C Process?

Posted on October 30, 2023
Written By QX Global Group

How Order to Cash Outsourcing Helps You Master the O2C Process

The order to cash (O2C) cycle is a mission-critical finance and accounting function that has a massive role in a company’s order fulfilment process and is essentially the financial component of this procedure. It covers the entire lifecycle, including receiving customer requests for products and services, fulfilling those orders, and getting paid. As can be imagined, it can be a complex process but repetitive at the same time, and it can also be time-consuming. This means you must assign more people to O2C to ensure a seamless process. However, there is a problem, and it is a severe talent shortage in the accounting domain, with 84% of CFOs in the US and UK pointing to a significant scarcity of talent. In such a scenario, you can leverage end-to-end outsourcing services that provide a solution for all the stage 

We are sure you have thought about outsourcing, at least as a way of bringing down the operational cost of your accounting department. But have you thought about harnessing the strategic value of outsourcing when it comes to the O2C cycle? This value goes beyond cost-effectiveness to make O2C more results-oriented for your company. 

What is the Order to Cash O2C process? 

To understand the value that outsourcing brings to the table for O2C, we must look at O2C from the perspective of a growing, forward-looking business. As they focus on customer acquisition and retention and enhance CX to deliver more customer satisfaction, these businesses must also focus on their O2C procedure. This involves order acceptance, credit term extension, delivery of products/services, and payment collection. The successful culmination of the length and breadth of these activities ensures stable financial health and growing cash flow. Getting O2C right improves the operational efficiency of the business and helps you nurture more robust relationships with not just your clients but also your suppliers. This enhances business credibility, which can fuel growth and profitability.  

What is the Process of O2C Process flow? 

The O2C process starts with a company setting the terms of credit for the buyer, whether upfront payment or a timeframe that allows the buyer to make payment before the due date lapses. This involves conducting credit checks and other activities that make credit control another critical process. It then accepts the customer’s order, moves on to fulfilling it, and presents the invoice to a customer, and this cycle culminates in payment and squaring the account books. While this process looks winding, every aspect has a role in ensuring effective O2C and maintaining growing cash flow for the business.  

The Role of Order to Cash Process Outsourcing 

How do you build a superbly efficient and tenable O2C setup configured to deliver long-term efficiency? One approach would be to make sustained investments in people, increase the headcount of your accounting team, and assign the right people to the suitable O2C activity to ensure it functions smoothly and is being scaled appropriately. This also calls for investing in infrastructure and software supporting all O2C activities. To implement this option, you will first have to address the issue of talent shortage in the accounting domain and make it worthwhile for talented accountants to join your company.  

This can take a lot of time and money. And, even if you invest both in massive amounts, you might fail. Enter end-to-end order-to-cash outsourcing services. Cost efficiency is undoubtedly the most significant benefit of any outsourcing process. Still, purely from the O2C perspective, it can help you set up a reliable process from scratch and drive more efficiency in the O2C process effortlessly. 

Here’s how order to cash outsourcing helps your company: 

  • Lays down a ‘people’ foundation

    The quality and quantity of accounting personnel that manage the O2C cycle can be the difference between an efficient and inefficient process. An outsourced accounting department helps you manage your business’s growing O2C needs with talented professionals who have hands-on expertise and experience in every aspect of O2C, and this department can be scaled as per your needs. You do not have to worry about the talent shortages plaguing the accounting industry in the UK; if you think you need more O2C personnel, the provider can seamlessly add new accountants to your project. Your O2C process is therefore strengthened by the expertise of people at the helm of affairs and labour cost arbitrage savings.  

  • People conform to an optimal ‘process’

    People cannot make a difference if they do not follow a standardised process, especially in any finance and accounting process, including O2C. Every O2C procedure must follow consistent steps to ensure optimal and on-time deliverables. The standardisation of the O2C process also ensures that you can assign tangible metrics to measure the performance of the people and the activities intrinsically linked with O2C, enabling you to improve as and when necessary. Your outsourcing partner can institute process standardisation that encourages process efficiency by tracking and monitoring actionable metrics. This can enhance your payment TAT, which improves cash flow. An example of a standardised and efficient process is creating and presenting invoices on time, keeping track of their payment, sending prompt reminders, and completing necessary reports in standardised formats. 

  • The technology element

    The right tools and technology bolster all processes, and even if your company has the right people, it might still be caught up in error-prone manual systems. More importantly, such legacy systems are not scalable. The right outsourcing partner can assign the right people to your project and fuel tech-led transformation by leveraging interconnected systems that improve data quality and processing. Additionally, they focus on automating repetitive, time-intensive tasks to improve accuracy, efficiency, and scalability.  

Why Should Company’s Focus on Improving O2C? 

Apart from a healthy cash flow, why should companies focus their attention on O2C? The answer lies in the slew of benefits it brings to the tables, including: 

  • Effective metric measurement can drive improvement in the customer’s purchase journey, thus improving the CX, which enhances customer acquisition 
  • It drives improvements in the order fulfilment processes by ensuring the correct orders are delivered upon order placement 
  • Order delivery happens on time, and therefore, the invoice processing happens on time 
  • Over time, sustained improvement can be made in order processing to improve fulfilment velocity 
  • When everything happens promptly, the levels of customer satisfaction go up 
  • The accounts receivable function also receives a considerable boost as there is faster conversion of invoices 
  • A healthy cash flow has a positive impact on the accounts payable function, as your business invoices can be paid on time 
  • You can initiate focused improvement in the supply chain process, factoring in supply chain shortages and optimal inventory 
  • It will facilitate better forecasting and financial planning and help set the stage for sustainable business growth 

If you want to develop a reliable O2C posture, it makes excellent business sense to work with a reputed order-to-cash process outsourcing provider who focuses on a people, process, and platform approach to bring about O2C transformation. QX has built a solid reputation for delivering outsourced finance and accounting services to business that helps them improve capacity and create a more robust O2C process focusing on sustainable outcomes.  

Contact our representatives to learn more about our end-to-end order-to-cash outsourcing services.

Originally published Oct 30, 2023 05:10:59, updated Nov 02 2023

Topics: Order-to-cash cycle

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