Ensure Better Cash flows through Unified Order-to-Cash Management during Geopolitical Turbulence

by Navin Gupta, on Nov 27, 2023 11:09:38 PM

Key takeaways

  • Unified finance and accounting automation platforms help to execute big orders in parts and ensure timely recovery during market turbulences and maritime.
  • The paradigm maintains business continuity during geopolitical turbulences, helping the economy stay afloat.
  • Unified finance and accounting automation platforms powered by Responsible AI help end-to-end automation of Order-to-Cash scenarios.

Ensure Better Cash flows through Unified Order-to-Cash Management during Geopolitical Turbulences

Geopolitical unrest affects businesses. Market displacements restrict supply chains and the inflow and outflow of material that, in turn, impede deliveries. During turbulences, some customers are unable to make upfront lump sum payments. As a result, businesses are unable to take large orders because of fear of loss. Such market conditions cumulatively affect receivables. Businesses have to adopt a modular approach at work and break down a huge purchase order into parts, with each part being delivered after the earlier payment completion. Unified finance and accounting automation platforms powered by Responsible AI make this task a breeze, right from order to cash (O2C). It also helps integrate third parties, such as banks, in the transaction making them stand guarantee till receipt of cash and safe delivery. In case of market upheavals, the business continuity stays unscathed, though a little slower. Similarly, the economy stays afloat without any significant dip. 

Challenges in Order-to-Cash Management Process Flow

  • Traditional payment routes: The regular payment methods fall short of speed, especially during times of calamities. Businesses should integrate their business models with the new secure and lightweight payment methods.
  • Day Sales Outstanding (DSO): Small to medium businesses lack inventories and prefer to deliver just-in-time. However, due to market conditions, upfront payments become difficult for some customers, leading to increased DSO. Vendors should have adequate measures to tap business opportunities while eliminating or hedging risk, for example: involving third-party Banks and NBFCs. 
  • Lack of visibility: Siloed order and cash management affect fast decisions. The lack of process visibility and transparency prolongs the turnaround of orders and also that of the cash receivables and cash application. Prolonged processes lead to further stagnation and losses.
  • Siloed analytics: Departments that are not automated to work in coordination cannot produce crisp analytics snapshots for management review in time. By the time they manually generate the reports, the real-time facts and figures undergo a significant change. 
  • Lack of speed: Speed to Market has to be fast else competition can swamp their low-grade products in the market bringing down the market demand. Low speed of execution negatively affects the brand image of the business.
  • Manual work and error: Data is at the core of production units, right from omnichannel order collection, order execution, to product delivery and receiving cash. Processes moving ahead through paper documents and manual data entry lead to errors and rework.
  • Stagnated cash flows: Prolonged processes and workflows affect the realization of cash in a timely manner. Cash receivable stagnation affects business revenue and hampers business decisions. 

How does Digital Transformation improve Order-to-Cash (O2C) Management?

Digital Transformation based on unified automation platforms enable businesses to optimize work processes and deliver optimum results during maritime as well as slack periods and geopolitical turbulences. It supports workflow automation that accelerates processes and offers maximum visibility. It helps execute a major purchase order in parts and integrate lightweight payment methods to ensure faster realization of cash in O2C workflows and improve business revenue. Some of the important transformations brought to table by Digital Transformation in O2C environment are - 

  • Integrated credit scoring: Businesses can evaluate creditworthiness of its customers before accepting huge orders.
  • Just-in-Time manufacturing: Production can be executed only after receiving the purchase order without holding product inventories. 
  • AI-enabled workflow management: It allows using algorithms at each node, from order receiving to delivery. It exponentially improves outcome. It allows integrating third parties, such as banks, to stand guarantee for executing large customer orders.
  • Integrated order management: Automation allows businesses to break down a big purchase order into parts. It allows the execution of each part only after receiving payment for the earlier part.
  • Integrated payment modes: Integrating lightweight payment modes helps to receive prompt payments in geopolitical environments where the regular payment modes are hampered.
  • Elimination of manual error: The O2C automation ensures that data keyed-in once is synchronized across all systems and workflows, eliminating error and rework.
  • Integrated reporting: It allows businesses to have a 360-degree view across the O2C process flow with anytime, anywhere access, to identify show-stoppers and mitigate risk. Integrated reporting enables predicting scenarios before-hand by using the available connected data. 
  • Accelerated operations: It accelerates the pace of operations across the floor due to end-to-end automation and minimal human involvement. Modular platforms allow integrating AP platforms as well and identifying raw material suppliers and supply chains. 
  • Data protection and security: It ensures that the data is secure at rest and while in transit.
  • Reconciliation: It allows reconciling the business data with the banking data at speed.

Simply put

Cash flows are hampered during geopolitical turbulence. Supplies and production are jeopardized. However, unified finance and accounting automation platforms enable businesses to take a modular approach to manufacturing and production and execute orders in parts ensuring timely recovery of payments. Driven by Responsible AI, the unified platform accelerates processes as well as helps predict scenarios based on data. 

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Topics:Finance & AccountingDigital

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