Rationale: - The reason we want to discuss benchmarking at this moment is that it's crucial when dealing with an economy that could collapse with the slightest disruption. Therefore, benchmarking is actually a tool that you shouldn't put on a shelf or in a drawer. It's anything you should use.
What are the benefits of benchmarking in the A/R industry?
So let's begin analyzing it. And, first and foremost, what are the advantages? The first three items on that list, then, all help you work more wisely. Therefore, our goal is to improve performance, quality, and efficiency, all of which can be achieved through benchmarking. The next two things help with goal-setting and motivate workers. In order to align the credit function with the rest of the business and truly make the order-to-cash process first-class and world-class, we want to use benchmarking to help our team become more focused.
Therefore, that is also important. The last two things, on the other hand, provide you with both micro and macro insights. Thus, it provides unique opportunities for discovery. The high end, or the macro view, is therefore there. The benefits are as follows: You may be wondering why we should benchmark and what we should specifically focus on when benchmarking, in addition to the benefits. The first step is to analyze, or simply analyze, how your performance compares to that of your peers. The second issue is that we are focused on the cost of the order-to-cash process.
Even though we don't often give it much thought, it's important when you start comparing yourself to others. One strategy for leveling the playing field and enabling apples-to-apples comparisons is data analysis. Examining the prices involved and determining whether your costs per employee are higher than theirs or vice versa can help you equalize everything. You can make several decisions based on what you already know. Through system failures and strengths, which we'll discuss in more detail on the following slide, we finally own our identities. Knowing where to optimize your company's operations is necessary before using benchmarking to have a better understanding of your systems. The customer journey, which includes order invoices, invoice changes, and payment processes as well as staff development and legal skills, comes first in this hierarchy.
How does benchmarking affect staff members and the overall A/R process?
Making your employees process-oriented and more objective than objective in their approach to A/R management is the whole point. So that's another thing that can be done to improve the process. Then, obviously, better data management and processing—that's really simple and guarantees ongoing process improvement from order to cash. Additionally, the words "continuous" and "improvement" are crucial there. Benchmarking is typically something you want to undertake on an ongoing basis and incorporate into your own processes as part of your management tools, although it can occasionally be more or less a once-and-done affair. The next step is to build a case for modifying your order-to-cash process. Because of this, we frequently wish to make changes. In order to convince senior management to streamline Odysseus, we frequently desire to tweak things and identify opportunities for improvement. That's all about efficiency, as you well know. Therefore, if we're not performing as well as our counterparts in this area, we can begin to construct a strong case.
The next two points, as you know, increase cross-functional collaboration while speaking to the organization's defined process roles and responsibilities. So those are equally crucial when presenting your case and putting process governance into practice. So there is better adherence to policies and procedures. And these matters are significant. At that point, we should better set improvement and performance goals, especially when we combine them with the previous big header. So, utilizing that tactic, we intended to create a plan to enhance our order-to-cash operations. Then, utilizing performance metrics, we wish to support end-to-end process management. Today's word is as follows: That is tactical acuity.
The goal of all of this is to, you know, help you better understand your systems and be able to explain to management and other order-to-cash process participants the weaknesses and strengths of your systems. Therefore, let's focus on what can be benchmarked. Therefore, the order-to-cash procedure is what we have here. easy to understand. Customer orders, customer credit orders, fulfillment, invoicing, collections, and payment posting are how we characterize it.
What are the things that can be benchmarked? How is benchmarking done?
There are multiple facets that we can benchmark and group into four general categories as we proceed with that process. And simply to help you understand what you can do and how to approach benchmarking, I'll offer the following framework: The invoice and payment cycle come first. We'll show you some metrics on the order capture, the cycle time (in days) between sending the invoice and receiving payment, and other factors. How long will it take to complete those tasks when we have the time, later on, to fix invoice problems and alter remittance processing metrics? How precise are you when it comes to the crucial invoice-to-payment cycle time?
There are many things you may add to it, therefore. the administration of credit and collections DSO and other indicators are available. Later on, we'll talk about DSO. We have accounts for every employee. And as we go through the number of calls and Dunning notifications being issued, we'll give you some information on that. So, what inputs do you have for credit collection? Several fresh accounts were approved, handled a number of orders? Inputs are crucial and can help you determine whether or not we have too many employees. When we don't have enough personnel, for example, do we need assistance with particular tasks? And then the volume of payment promises and the proportion of those promises that are kept, particularly when people are automated, can lead to some pretty fascinating areas, sitting and adjusting granular data that offers insightful information.
This % helps us realize the effectiveness and efficiency of the collectors. Deductions are their own subarea, you know, and there's so much that can be done there. We won't focus on this for too long. The volume of deductions, the cycle times required to resolve them, the length of time required to resolve them after being escalated, and the percentage of deductions that must be escalated after being resolved the first time are all significant factors. In addition, when looking at the overall order-to-cash process, how much does it cost to carry out the various parts of it per full-time employee?
It goes without saying that external companies are important sources for benchmarking. These are arranged alphabetically on my list. APQC, which stands for American productivity and quality centers, is the result. We have a casual relationship with them and are partners with them; they share certain data with us. We're going to run today, and we'll talk about the many things we do later. Meanwhile, we have access to a variety of surveys and benchmarking data, including the CRF, DNA, CME, and credit bureaus, as well as internal benchmarking. It is definitely longitudinal, thus it is from one month to the next, from one year to the next, or before and after an event, a project, or something similar. So that's also helpful; it reveals your tendencies and your direction of travel. Then, of course, there is peer benchmarking, which will be covered in subsequent sections.
Watch the complete discussion by clicking on the below link.
|
|
Editor
|
|
.png) |
|
|||||||||||