|Business Credit Articles
How to be Proactive in Driving Revenue Assurance
Like the nonstop drip of a worn out faucet, revenue leakage - steady,
incessant and ultimately costly-can only be stopped completely by fixing
the leak. Organizations today are at risk of losing a significant percentage
of gross revenues because of leaks, gaps and undetected errors in their
business processes. The sales order management process and the entire
quote-to-cash cycle have become increasingly complex, due to rising
sales volumes, intricate product pricing and configurations, fast-changing
promotions, and the impact of the internet. Fragmented across disparate
systems, applications and organizational boundaries, the quote-to-cash
cycle and associated processes are now fertile ground for profit loss
in the form of late pays, charge backs, write-offs, penalties and unearned
discounts. Often errors aren't even detected till much after the fact
resulting in revenue erosion. Even when errors are detected, it's usually
too late to fully recover the lost days sales outstanding and productivity
Unlock capital, stop revenue leakage and reduce operational costs.
Effective revenue assurance rests on business policy exception detection
and resolution, continued process improvement initiatives based on
actionable visibility to transaction data, and automation of receivables
and collections functions. Put these three key elements together and
significant capital can be unlocked, no matter how complex an organization's
quote-to-cash cycle may become.
Proactively identify exceptions and stamp out revenue and capital leakage.
The first step towards this goal is to centralize and correlate all
order-related information. This includes quotes, purchase orders, change
orders, and sales orders and other key transactional documents as they
are generated, and as they flow across various transactional systems
and organizational boundaries. The next step is to provide a consistent,
easy-to-use, and simple-to-understand interface to this information
in order to enable holistic visibility into the process, end to end.
This ensures that all data and transactions that fuel key business
processes are accurate, and that the processes themselves are auditable.
Drive continuous process improvements and achieve best-in-class performance.
In the spirit of ISO, Six Sigma and other business quality improvement
initiatives, the insights derived from having actionable visibility
into the quote-to-cash cycle can be marshaled to drive continual business
process improvements. It is not enough to simply detect and resolve
problems within the quote-to-cash cycle. It's just as important that
once a problem is detected, to identify, analyze and eliminate its
Automate your receivables and collections management efforts to reduce DSO.
Equally important is addressing the mud that comes with the leak.
Unaccounted for discounts and deductions, unreconciled charge-backs
and penalties, and significant delays in payments - all rack up costs
in revenue leakage and locked-up working capital. Worse still, the
receivables and collections teams end up cleaning up the mess with
severely inadequate tools. Too often multiple enterprise resource management
systems with different data hierarchies mask easy visibility to the
total positions. Much of the actual forecasting, prioritization and
communications work in collections is done manually - using individual
spreadsheets, pencil and paper. As economic environments change, consistently
and immediately changing credit and collections policies is tricky
at best, and auditability of the entire process leaves much to be desired
in the world of increasing focus on compliance and governance.
Real value in the real world - a reality today.
In order to prevent revenue and receivables leakage, an increasing
number of forward looking organizations are implementing solutions
that can arrest this problem now. Indeed technology solutions that
monitor and help fix errors and exceptions in the order to cash process,
automate the receivables and collections management process, and deliver
real-time click through visibility across the financial transactions
are delivering tremendous returns - in revenue assurance, unlocking
working capital, reducing operational costs, and improving customer
interactions. And finance professionals in these companies are spending
more of their time working on strategic finance initiatives that deliver
higher value-added to their corporations, rather having to plug the
leaks with their fingers.
Reprinted with permission of The Covering Credit Newsletter, 10/1/04 Edition.
Provided by anscers Encyclopedia of Credit