Order to Cash. Cash is King. Prime elements, points that block successful ETE flow. KPI's/metics and how to guage where your company really ranks: a Business leader, Average, or Laggard.

1. John Choate – PMMS SIG Chair
Scott Pezza – Blue Hill Research
QUOTE / ORDER TO CASH (O2C)
2014 UPDATE

2.  What is Quote/Order to Cash?
 Why focus on O2C Process?
 Why Cash improvements?
 Typical areas effected by O2C process
 “Simplified” view of Order to Cash Process
 Common Pinch Points
 Symptoms of a BROKEN O2C Process
 ACES
 KPIs/ Metrics & Results
 Key Take Aways
PRESENTATION CONTENT

3.  Quote/Order to Cash (O2C) normally refers to the Enterprise Resource
Planning (ERP) process in which taking customer sales orders via different
sales channels (such as email, internet, sales person, fax or by some other
means like EDI), and then fulfilling the order, shipping, logistics and then
generating an customer invoice and collecting payment for that invoice and
then receipt.
 CASH IS KING !
 Lifeblood of any company and
 It flows through the ETE order-to-cash cycle.
What Is Order To Cash ?

4. KEY PRESSURES:
Why Focus on O2C ?
19%
19%
21%
29%
29%
67%
0% 10% 20% 30% 40% 50% 60% 70%
Percentage of Respondents, n = 140
Customer pressure to extend payment terms
Rising cost of servicing major customers
Inability to accurately forecast cash flows
Customer demand to improve service levels
Risk of customer non-payment or default
Pressure to reduce overall costs
Source: Aberdeen Group, The Order-to-Cash Cycle: Enhancing Performance with Process Automation (July 2011)

5. KEY OBJECTIVES:
Why Cash Improvement?
30%
34%
35%
36%
42%
54%
0% 10% 20% 30% 40% 50% 60%
Percentage of Respondents, n = 140
Manage credit risk, losses from bad debt, and
collections expense
Improve transaction efficiency
Reduce 'customer-to-cash' or 'order-to-cash'
cycle
Reduce receivables processing cost/time
Improve cash flow forecasting/guidance
Reduce Days Sales Outstanding (DSO)
Source: Aberdeen Group, The Order-to-Cash Cycle: Enhancing Performance with Process Automation (July 2011)

6.  Customer (Quote/Order)
 Sales
 Customer Service
 Finance and Accounting
 Supply Chain
 Fulfillment / Logistics
 Customer (Cash)
TYPICAL AREAS AFFECTED BY O2C CYCLE
An “Integrated “ End to End Process

7. “Simplified” ETE Order to Cash Process - Visualized!

8. “Another” Order to Cash Process ?

9.  Number of ways a order can be placed
 Sales Order Integrity
 Automated versus Manual
 Product Linkage
 Customer status
 New, Preferred, Repeating, etc.
 Credit Limit
 Method of Payment
 Availability of Product
 Carrier Availability & Mode
 Customer Satisfaction
 RMA Process
Common Pinch Points
9

10. Symptoms of a BROKEN Order To Cash Process
 High order-taking error rates
 High order-fulfillment error rates
 High DSO (Days Sales Outstanding) rates
 High cost of dispute resolutions
 Inefficient/ineffective collection processes
 Long-term losses due to customers going to better managed companies for
product/services

11. Blue Hill ACES Methodology
A
C
Reduced cost
Increased revenue
Tech
People
Budget
Headcount
E
S
Company recognition
Industry recognition
chievements
ontributors
conomics
uccess
Productivity
Table stakes
Process
Metrics
Payback
Meet job KPIs
Get promotion

12. ACHIEVEMENTS (A):
 Reduced overall costs
 Lower Days Sales
Outstanding (DSO)
 Improved customer
satisfaction
 Greater ability to forecast
cash flows
ACES Methodology >> Order To Cash

13. CONTRIBUTORS (C):
 Event management (triggers and alerts)
 Electronic interfaces to banks and
customers
 Web-based and electronic sales order
management application
 Credit management solution
 Electronic Invoice Presentation and
Payment solution
 Enterprise (ERP) features, extensions, or
RDS packages:
 Tiered Dashboards (KPI’s/Metrics) /
Analytics
 Customer Relationship Management
(CRM)
 Advanced Planning and Scheduling
(APS-APO)
 Sales & Operations Planning (S&OP)
 Procurement (Business Commerce &
Cash Management)
 Extended Warehouse Management
(ETE execution tools)
ACES Methodology >> Order To Cash

14. ECONOMICS (E):
 Headcount – Redeployment of FTEs on more value-adding tasks or
lower total number of FTEs required.
 Budget – Improved collections, lower DSO, and less bad debt provides
additional cash flow to fuel Business growth & productive operations.
SUCCESSES (S):
 Sharing your experiences with ASUG peers
 SIG Webinars – Business Use cases
 Industry wide recognition of great results
ACES Methodology >> Order To Cash

15.  Quotation and Sales Order (SO) Aging
 Order Fulfillment Period
 On Time Delivery (OTD) - %
 Perfect Order
 Finance/Accounting
 Invoice
 Payments
 Collections
Key KPIs & Metrics
Benchmark: KPILibrary.com

16.  31% improvement in order-to-fulfill cycle time
 97% complete and on-time shipments
 33.5 DSO
 3.3% of AR past due
 1.3 days for payments to clear the AR ledger
 16.2% of invoices require manual intervention
 2.6 days from completion of product/work to invoicing
Performance Results: Best-in-Class (Top 20%)
Sources: Aberdeen Group, The Order-to-Cash Cycle: Enhancing Performance with Process Automation (July 2011);
Aberdeen Group, The Order-to-Cash Cycle: Integrating Business Processes to Improve Operational Performance
(March 2008)

17. AR Technology Profile
BEST IN CLASS
50%
47%
43% 43%
37% 37%
33%
26%
23% 23%
18%
12%
0%
10%
20%
30%
40%
50%
60%
Integrated
Order-to-Cash
Systems
BI /
Analytics
Electronic
Workflow
Performance
Dashboards
Event
Management
Customer
Portal
Best-in-Class All Others
Source: Aberdeen Group, The Order-to-Cash Cycle: Enhancing Performance with Process Automation (July 2011)

18.  15% improvement in order-to-fulfill cycle time
 88% complete and on-time shipments
 48 DSO
 8.6% of AR past due
 4.1 days for payments to clear the AR ledger
 44.9% of invoices require manual intervention
 3.9 days from completion of product/work to invoicing
Performance Results : Average (Middle 50%)
Sources: Aberdeen Group, The Order-to-Cash Cycle: Enhancing Performance with Process Automation (July 2011);
Aberdeen Group, The Order-to-Cash Cycle: Integrating Business Processes to Improve Operational Performance
(March 2008)

19.  58 DSO
 16.1% of AR past due
 9% improvement in order-to-fulfill cycle time
 83% complete and on-time shipments
 11.7 days for payments to clear the AR ledger
 79.9% of invoices require manual intervention
 6.1 days from completion of product/work to invoicing
Performance Results : Laggard (Bottom 30%)
Sources: Aberdeen Group, The Order-to-Cash Cycle: Enhancing Performance with Process Automation (July 2011);
Aberdeen Group, The Order-to-Cash Cycle: Integrating Business Processes to Improve Operational Performance
(March 2008)

20.  Implement or expand automation of the Order-to-Cash (O2C) cycle.
 Standardize procedures for quotation and order management.
 Integrate order entry, credit, billing, and collections.
 Investigate benefits of event management and automated alerts.
 Centralize customer risk information in a single location.
 Keep up on regular scoring of the A/R portfolio.
 Continue growing electronic volumes of POs, invoices, and payments.
.
Steps For Increasing Your O2C Success
20

21.  Improving efficiency addresses both the top pressure (cost)
and the most-cited objective (DSO)
 Improvement comes from streamlining internal processes and
making it easier for customers to work with you
 Understanding your current and prospective customers can
help reduce non-payment risk and tailor collections strategies
 Communication, between departments and with your
customers, is key to efficiency and visibility into cash flows
Key Financial Take Away Items
21

22.  Cash is King!
 BROKEN O2C PROCESS = Potential lost customers!
 ACES can focus your O2C success!
 Order Fulfillment period is a key O2C metric.
 Where does your company rank as a O2C process leader?
 Best-in-Class
 Average
 Laggard
Key Take Aways
22

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24. John Choate – PMMS SIG Chair
Scott Pezza – Blue Hill Research
QUOTE / ORDER TO CASH (O2C)
2014 UPDATE