Metrics to Measure Order to Cash KPI

In order to deliver on quarterly financial objectives, responsible executives need early warning indicators and pro-active control systems in place. Everything they need to know is contained inside their Order to Cash processes; yet, a majority of companies don’t have an effective system in place to measure substantial KPIs.

Order-to-cash-kpi (1).pngCritical O2C metrics should be measured across different departments and different stages of the customer relationship. However, just because your reporting system is capable of generating unlimited reports does not mean you should track a copious number of metrics. Creating a plethora of reports no one will read, is just as ineffective as not creating enough. Here we will identify the essential metrics to measure KPIs that will drive performance and customer satisfaction helping you save time, energy, and manpower for the information you really need.

Overall Results

These reports include business outcomes and performance measures for billing accuracy, order processing, and invoicing. You will want to measure the revenue percentage with information on the value of the O2C process in terms of percentage of revenue contribution. That way the managers will know if the income generated from this process makes up an adequate quantity of the earnings of the company, or if there are earnings coming from other sources.

Operational and Individual

Here you will establish performance drivers monitoring volumes, timeliness, accuracy, and backlog. Failing to measure turnaround times can lead directly to high processing backlogs, while not accurately tracking invoice payments can lead to collections burdening customers who have already paid. By measuring individual productivity throughout the O2C process, managers will be able to gain a deeper insight and see if a process needs more associates, or if there are too many of them causing confusion and delays. Measuring this ratio can help reduce cost and assist in future planning after analyzing how much work can be distributed to different departments.

Reporting_Graphs_1.pngDeeper Dive into Data

Analytics can be utilized here for quarterly or bi-annual reports delving into AR portfolios and setting DSO targets. This measurement can be used for not only evaluating the process, it also allows the finance teams to monitor the revenue that the company is earning and the outstanding debts that need to be resolved. The collections team can design its strategy based on this ratio. Utilizing automated reporting processes, like Amalto's e-Business Cloud, can make graphical reports, excel reports, and scheduled email reports easily accessible on multiple devices. For example, an invoice analysis report can be created in an online graphical format or in a downloadable excel report. Here you can view invoice amounts billed each day, week, month, and year with sales order creation to invoice time, sales order volumes by sales person, and sales orders not invoiced.https://www.amalto.com/platform/features/reporting

Automation

Development and availability of innovative technology is initiating faster processes, automating repetitive work, reducing FTEs, systemizing operations, and improving customer handling. These metrics need to be measured to ensure that the automation and process improvements are accurately working. Here you will determine what the extent of the automation is, how much of the process was done manually, has the error rate decreased, are orders being fulfilled faster, and cash is being collected quicker.

Regularly using these metrics to measure areas in need of improvement will help accelerate revenue delivery and eliminate surprises by providing high-impact insight into how your company is performing. These insights are the keys to unlocking numerous benefits such as greater sales productivity, increased profitability, and higher customer satisfaction.