Information shouldn’t live in silos, so why should your accounts receivable solution?
FUNCTIONAL SILOS. The dreaded and pervasive killer of our precious productivity and agility. Despite efforts to break them down — process re-engineering, new business models, etc. — many functional groups still work independently, with their own unique agendas, goals and objectives.
The result? Poor communication and disorderly project management that hinder efforts to drive the business strategy forward.
What can make silos seem so concrete and unbreakable is that sometimes our silos are siloed themselves. That’s right, double silos.
Take accounts receivable (AR), for example. At a high level it may look like one function within accounting and finance, but a closer look reveals a series of separate AR functions. From order processing, to billing, to credit & collections, to payment processing and more, we’ve more often seen these functions operating individually than as one AR operation.
Just how siloed is AR?
Less than 5 percent of AR functions are totally integrated across the order to cash cycle (O2C), according to a recent Institute of Financial Management (IOFM) survey. And while 43 percent of teams report some “formal coordination” between the groups, 13 percent report no linkage or coordination at all.
The lack of integration can hurt AR, and the business, in the long run. The C-Suite may charge AR with helping the overall goal of reducing cash flow risk (i.e., ensuring the company gets paid), but AR teams operating in separate lanes could have competing or contradicting goals that don’t drive AR as a function toward that goal at the same pace.
For example, a customer service representative may extend the payment deadline to a particular customer to support customer satisfaction goals, while those in collections want to collect payment ASAP to reduce their number of outstanding payments. Or, proof of delivery policies and procedures, driven by the need to accurately account for products and services delivered, could compete with the billing team’s efforts to invoice customers as quickly as possible.
But even when finance leaders recognize these issues with goal alignment, inert organizational structures within AR can make them hard to resolve.
The same IOFM survey revealed that only 7 percent of organizations have a single O2C process owner. Many AR functions operate as a mix of in-house, outsourced, and/or off-shored teams, the complexity of which makes a holistic order to cash process approach challenging.
Breaking down silos
Silos, at their core, are built by an organizational compulsion to control. This need to control stems from a lack of trust — lack of trust in others’ capabilities, information, creativity, and ability to get the job done.
So how can AR organizations stop the billing, collections, and payments teams all from giving each other the side eye? A good place to start is ensuring that every function within AR is performing individual tasks based on the same information — which you can achieve by moving AR to a common enterprise content management (ECM) platform.
Managing information from a central location not only makes it easier to access across functions, it also enables more informed decision making by providing a view of all relevant information together. Once your ECM solution captures a sales order, it verifies that information (products, quantities, item numbers, prices, customer and billing data, etc.) against any existing data already in the system and using workflow software, it automatically routes it to the next decision maker to continue processing the order.
And integrations between ECM platforms and line-of-business systems connect data to ensure the most updated information is available to all, whether they are local, remote, or at a satellite office.
Regardless of O2C stage, with a common ECM platform the entire AR team — from billing, to collections, to payment processing — can be confident that they are working with and making decisions based on the right information. You accelerate the entire O2C process by eliminating the time wasted on double-checking data between functions and resolving disputes and issues due to data errors — problems that can lead to increased mistrust between teams and ultimately more entrenched silos.
Siloed technology solutions can exacerbate the sluggishness and disorganization we all despise and hamper efforts to accelerate the O2C cycle. While finance leaders may never be able to fully eliminate silos within their organizational structures, bringing AR onto one ECM platform could be the best way to start breaking them down. Forever.
Danielle Simer is a marketing portfolio manager at Hyland. Her mission is to share best practices and evangelize the power of enterprise content management (ECM) as a tool to automate paper-based processes and improve operations across accounting and finance, human resources, and contract management. Danielle joined Hyland after more than six years with a research and advisory firm devoted to helping senior executives manage their departments and teams more effectively. She received her bachelor’s degree from The Ohio State University and her MBA from Georgetown University’s McDonough School of Business.
Originally published at www.requordit.com.