Discover how our Process Mining software can improve your financial processes
What is cash flow?
Cash flow is a strategic element of the company. It can be summarized as the total amount of money available to the company at a given moment. It is often an indicator of good health: it allows to pay employees, to produce products or services, and also and especially to invest.
If there is a surplus, it can be a sign of bad management; if there is a deficit, it can lead to the loss of the company.
Two essential elements constitute the cash flow: the payment of suppliers and the payment of customers. These are called procure-to-pay (P2P) and order-to-cash (O2C) respectively.
These two processes are therefore crucial to sound cash management. Let’s go back to their stakes and why it is important to control these flows and processes.
What is Order-to-Cash?
It is a complex process that goes from the customer order to the final payment of the invoice. It covers the entire scope of the company: sales, production, inventory management, finance, etc. Customer satisfaction, profitability and improved cash flow are the result of its fluidity and efficiency.
Which are the main steps of an O2C process?
Which are the main challenges of an O2C process?
The volume of sales and the diversity of products and services sold often make this process more complex than it seems.
This complexity brings real challenges for the company:
- Make the customer’s journey as smooth as possible
- Have a sufficiently fast and efficient process to accelerate the payment and collection of invoices
- Automate as much as possible the tasks that generate errors or slow down the process
- Keep the customer promise
How O2C can benefit from Process Mining?
Process Mining is a technology that will allow you to control all the key stages of this process and to monitor the progress of customer orders in real time. This will notably allow to :
- Make visible the deviations of the process imagined at the origin and to identify the bottlenecks, the reworks, the errors, etc.
- Identify the most time-consuming phases of the process and those that can be automated
- Identify the root causes of process deviations to act on optimization and make the right decisions
- Predict possible process deviations in order to provide the right corrective solutions
The benefits are obvious: you gain in processing time thanks to automation, you have a better control of your processes and therefore avoid errors and double processing. Finally, you gain in efficiency and therefore reduce the time between the order and the payment of your customers.
What is Procure-to-Pay?
Procure-to-Pay is an equally strategic and complex process.
Some companies may have to deal with a multitude of suppliers and interlocutors. They need a very precise management of their purchases to avoid:
- insufficient or too large stocks
- errors in the orders made and to ensure that they control the entire validation chain internally for this sound management of purchases.
Which are the main steps of a P2P process?
Which are the main challenges of an P2P process?
The stakes in this process are multiple:
- The efficiency of the supply chain and the good management of stocks to ensure a good level of production
- The fluidity of the process: the procure to pay is often made up of multiple validations to avoid errors, which causes latency in the creation of supplier accounts, lengthening the latency time between product needs and their delivery, etc.
- Regulatory with invoice payment deadlines that are standardized and contractual
How P2P can benefit from Process Mining?
Process Mining will allow you to visualize the history and in real time the way the whole process is operated: from the creation of the supplier account to its payment. In a procure-to-pay process, the different validation steps are crucial: process mining allows you to make sure that a purchase request has respected all the steps and to evaluate which steps may take longer or where there are backtracks that may be a source of error.
Having a global and precise view of how the processes will be operated brings a real value in:
- Optimizing purchasing strategy and compliance with internal rules
- Maximizing processing times and thus making procurement and inventory management more fluid
- The compliance of the processes and the respect of the legislation in terms of payment deadlines