Cash is King


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Information on the eleven step process for effective and efficient "order-to-cash success".

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Cash is King

  1. 1. CASH IS KING The Eleven Step Process For Effective and Efficient “Order-to-Cash Success”
  2. 2. Core Elements of the Order-To-Cash Process. <ul><li>Your Organization </li></ul><ul><li>Your people </li></ul><ul><li>Systems </li></ul><ul><li>Procedures </li></ul>
  3. 3. The Eleven Step Process <ul><li>The Sales Call </li></ul><ul><li>The Credit Check </li></ul><ul><li>Contract Payment Terms and Conditions </li></ul><ul><li>Order Entry </li></ul><ul><li>Shipping </li></ul><ul><li>Billing </li></ul><ul><li>Collections </li></ul><ul><li>Legal Action </li></ul><ul><li>Cash Application </li></ul><ul><li>Customer Statements </li></ul><ul><li>Customer Payment History. </li></ul>
  4. 4. The Sales Call To The Customer <ul><li>Is the Sales force fully knowledgeable about the company’s payment terms and conditions? </li></ul><ul><li>Does the sales force understand the procedures to alter company’s standard payment terms and conditions? </li></ul><ul><li>Does the sales force understand the consequences of selling payment terms and conditions outside the company’s standards? </li></ul>
  5. 5. Credit Check <ul><li>Does the company’s Credit and Collection Department have the necessary resources to perform “due diligence” on all potential new sales? i.e. Dunn and Bradstreet? </li></ul><ul><li>Has your company done business with this customer before? </li></ul><ul><li>Are there company standards/guidelines for potential new customers to meet? </li></ul><ul><li>If potential new customers fall outside the company’s standards/guidelines, is there an exception approval process? </li></ul><ul><li>Is this going to be a COD or CBD customer? </li></ul>
  6. 6. Contract Payment Terms and Conditions <ul><li>Has there been an annual review of the company’s standard payment terms and conditions? </li></ul><ul><li>During the annual review, is the Credit and Collection Department involved? </li></ul><ul><li>Is there an annual review with the sales force regarding the company’s payment terms and conditions? </li></ul><ul><li>Are the company’s standard payment terms and conditions approved by the Chief Financial Officer of the company? </li></ul>
  7. 7. Order Entry <ul><li>Do you have a valid, fully executed customer purchase order/contract? </li></ul><ul><li>Have you verified the billing and ship-to addresses? </li></ul><ul><li>Have you verified that the current or most up-to-date pricing list is being used? </li></ul><ul><li>Have you verified that the correct part numbers are being used by the customer for each item or service being offered? </li></ul><ul><li>Do you contact the customer regarding discrepancies on the customer purchase orders, with a copy to the sales person? </li></ul>
  8. 8. Shipping <ul><li>Did the Shipping Department receive a valid customer purchase order/contract from order entry? </li></ul><ul><li>Is the order going to be shipped in full or is there going to be a backorder? </li></ul><ul><li>If any part of the customer purchase order/contract is backordered, is notification sent to the customer, order entry and the sales person? </li></ul><ul><li>Is this a COD or CBD Customer? </li></ul>
  9. 9. Billing <ul><li>Does Billing have a valid executed customer purchase order/contract? </li></ul><ul><li>Does Billing ensure the billing and ship-to addresses are correct? </li></ul><ul><li>Do you ensure that the invoice is sent to an individual (if required), but at minimum to the customer Accounts Payable Department? </li></ul><ul><li>Does the original invoice have the appropriate copies attached to it? </li></ul><ul><li>Does the invoice reference the purchase order/contract? </li></ul>
  10. 10. Collections <ul><li>Does the Collection’s Department have the correct number of collectors for its volume of invoices to be collected? </li></ul><ul><li>Have the collectors been trained on the “Art of Collections? - The Six Step Collection Process”? </li></ul><ul><li>Does the Collection’s Department have the most efficient accounts receivable system, showing the total account balance in customer statement format? </li></ul><ul><li>Does you company have a balance forward customer statement? </li></ul>
  11. 11. Legal Action <ul><li>Does your company have a reputable and effective Collection Agency or outside Legal Council? </li></ul><ul><li>Do you ensure that your Legal and Collection teams are not “one time collectors”? </li></ul><ul><li>Do your collectors know the applicable laws governing commercial vs. consumer collections? </li></ul><ul><li>Knowledge of customer liens </li></ul><ul><li>Collections through the courts </li></ul><ul><li>Legal Work Stoppage </li></ul>
  12. 12. Cash Application <ul><li>Does your company do “in house” or “outside” cash application? </li></ul><ul><ul><li>“ In house” - no more than two days of unapplied cash is paramount. </li></ul></ul><ul><ul><li>“ Outside” - no more than four days of unapplied cash is paramount. </li></ul></ul>
  13. 13. Customer Statements <ul><li>Are all customer statements mailed out no later than the second/fourth work day of the subsequent month? </li></ul><ul><ul><li>Customer statements that are not up to date with payment postings will be the first line of defense the customer will use to not make payments. </li></ul></ul>
  14. 14. Customer Payment History <ul><li>After Customer Statements are mailed out, your credit history records need to be updated for future reference regarding continuing business with each customer via the Credit Check. </li></ul>