Optimizing Working Capital: Risks Of Not Implementing Order To Cash Software


As finance executive, the task of optimizing working capital management is continuous and complex process. At the heart of it lies the order-to-cash cycle, which begins with capturing data from the customer orders, and ends with the collection of payments. Firms tend to automate and streamline this process through order to cash software, allowing the visibility and efficiency in managing this process. However, the risks associated with not implementing order to cash software need to be taken into account.

The order to cash process is characterized with several stages, including invoicing, collecting payments and cash application. The manual efforts involved with every step and coordination between departments to ensure accuracy can be time consuming and expensive. Furthermore, the manual process exposes firms to several risks, such as mismatched data or entries, and document errors, slow reconciliation, and inaccurate cash forecasting. The impact that follows can be profound: lost customers, unbilled sales, disputed invoices and collections, and impeded visibility, making it difficult to identify potential problems.

In stark contrast to the manual process, order to cash software offers more cost effective solution to reducing the days sales outstanding (DSO), which is the metric used to measure the average number of days taken for firm to receive payment after sale. By creating visibility into the order-to-cash flow, cash forecasting can be completed with greater ease and accuracy. This enables better planning and payment maintenance. Additionally, automation of the process ensures faster cash collection and reconciliation resulting in faster cash inflow and increased operational efficiency. This ultimately leads to improved customer satisfaction and reduced DSO.

Overall, utilizing order to cash software provides financial superiority over manual order to cash management activities, facilitating improved DSO and AR management as well as real time visibility into the process. Despite the fact that manual order to cash is hampered with risks such as inaccurate data, fraud and costly errors, automation of the process enables faster cash collection, identifies opportunities to minimize disputes and improves customer satisfaction. With the rising number of sophisticated software solutions, finance executives must consider investing in the latest technology to facilitate optimal cash flow and manage working capital in the most efficient manner.