Looking Beyond Traditional O2C Solutions: The Limits of Business Process Outsourcing

Eric Fay
By Eric Fay | December 3, 2020
About Eric
Looking Beyond Traditional O2C Solutions: The Limits of Technology and Automation

Issues like high DSO, long customer onboarding processes, time-intensive and arduous credit approvals, dispute and collections management, and customer pressure to extend payment terms are all issues that have long plagued Order-to-Cash (O2C).

Some businesses simply lack the expertise or resources to tackle such challenges and see outsourcing and labor arbitrage as the best possible remedy to costly O2C processes. Companies usually turn to Business Process Outsourcing (BPO) firms because it gives them a chance to leverage experts for transformation or achieve full-time equivalent (FTE) cost savings through labor arbitrage.

Business Process Outsourcing: Strengths and Weaknesses

In cases where the BPO proves to be a cost-effective option, businesses can  better focus on their core business activities while also achieving more control over customer relationships.

Strengths

  • BPO’s can be the appropriate option for decisionmakers whose business has significant technology, staffing, and talent deficits within the O2C cycle.
  • Labor cost savings from FTE’s dedicated to O2C activities such as invoice distribution, cash applications and collections can be significant.
  • These firms may offer industry specific domain expertise and have access to advanced technology toolsets for O2C automation. The combination of industry knowledge and managed technology means that they can give actionable intelligence that can help improve the profitability of customer relationships.

Weaknesses:

  • A considerable upfront expense may be necessary for the BPO provider to build or adapt its existing technologies and processes to your unique O2C requirements. Fee structures for O2C BPO services usually lack incentives for the BPO provider to deliver the highest-quality experiences to your customers.
  • BPO providers do not provide financial management services such as assuming customer credit risk, managing payments or guaranteeing payment receipt at a specific DSO.
The Limits of Traditional O2C Solutions
Get the White Paper

The Problem with Business Process Outsourcing

While BPO looks to be a cost-effective option, there is no guarantee that you are getting your money’s worth. High deployment costs and uncertain future expense to accommodate new process needs can complicate ROI considerations.

Also, with the financial services component missing, BPO providers cannot guarantee credit risk reduction, bad-debt elimination or achievement of specific DSO reduction goals.

The Corcentric Managed O2C Solution

Whether you opt for automation or BPO to optimize your O2C operations, there is no single solution that can guarantee business outcomes.

This is why Corcentric’s solution takes a comprehensive approach to O2C by combining technology, consultative services and financial services. With the combination of the three, Corcentric’s Managed O2C solution guarantees immediate business outcomes that will ultimately improve your working capital.

With the Corcentric solution, sellers receive customer payments on terms of their choice, and the seller is relieved of responsibility for bad debt or any credit risk. For example, if a seller engages Corcentric to reduce DSO among some, or all, customer accounts from 60 days to 30 days, the seller will immediately begin receiving those customer payments on exactly 30-day terms — guaranteed and independent of when or if the buyer remits payment to Corcentric. Within this engagement, Corcentric would assume responsibility for assessing and extending credit for customers, distributing invoices to customers in their preferred invoicing format, and administering any dispute resolution activities.

With guaranteed on-time payments, DSO reduction and elimination of credit risk, Corcentric provides sellers with complete working capital control and unlocks cash from receivables immediately for use anywhere in the business. At Corcentric, the nexus of O2C technology, BPO services and finance represents a differentiated O2C approach capable of addressing the challenging B2B environment of today with guaranteed business outcomes no other O2C approach can achieve.

Download our whitepaper to learn more about the value of guaranteed O2C business outcomes and how Corcentric’s Managed O2C solution can help your company achieve its O2C goals.

Featured Resource:
Webinar: How to Develop a Plan for Mitigating the Risk of Payment Fraud

Mitigating the Risk of Payment Fraud

An important discussion on the post-pandemic rise in payment fraud and how to develop a plan for preventing it.
Watch Now

Subscribe to our blog for more thought leadership pieces like this one.