The Future of Invoice-to-Cash Process

Introduction

Accounts Receivable(AR) has gained prominence as a crucial business function for enterprises, moving beyond the CFO’s office. Even the priorities for invoice to cash processes are changing due to rapid digital transformation and technology adoption. Functional silos have broken, more emphasis is given to end-to-end conversations, and the focus on data has increased now, than ever before.

The Next-Gen Invoice-to-Cash Process

“We strongly believe that the future of finance will be extensively influenced by an ideal combination of digital and domain. So the coming together of leaders in AR software as a service in the AR domain space is inevitable and destined.” Sajeesh Kumar, Invoice to Cash Global Enterprise Head – Genpact.”

Finance leaders and GPOs are now looking for ways to convert their AR function into a strategic and customer-oriented one. More than cost savings and efficiency, they are trying to focus on outcomes through data-driven actions and value-based offerings. Cash and customers have emerged to be the two critical areas in recent times. GPOs can improve on these areas and build a successful invoice to cash process through,

• Data: Generating actionable business insights and getting 360-degree visibility into the process.
• Benchmarking: Determining not only the efficiency but also the effectiveness of processes to measure the success of transformational A/R projects.
• Technology: Moving from automation to autonomous systems for smart and strategic decision-making.

Roadblocks for Invoice to Cash Process Transformation

“The biggest challenge that most enterprises have had is to spend millions of dollars on tech interventions with no assurance of whether the tech would work at all. And there’s zero business context associated with that purchasing decision.” – Sajeesh Kumar, Invoice to Cash Global Enterprise Head – Genpact.”

The opportunities for invoice to cash are immense, but many organizations are still struggling to capitalize on these. They are spending their efforts and money on transformation projects but not getting the desired impact on their overall business goals. 80% of the invoice to cash team’s time is spent gathering data and reducing the transactional backlog, leaving just 20% to drive insights, value, and decision-making to accelerate cash flow.

While finance leaders and GPOs are investing in the right technology and talent, it is also important not to lose sight of the end business goal in the maze of transformation. Organizations need to remain agile and think beyond the existing mandates of the AR portfolio or AR-specific metrics alone. And this is where having a balanced approach for measuring efficiency and effectiveness is crucial.
“Order-to-cash leaders should look at the invoice-to-cash process with two different dimensions when it comes to measurement. One is efficiency, and the other is effectiveness. Most of the time, operation leaders focus more either on efficiency and cost optimization or on effectiveness, but not necessarily both. But, these two metrics taken together is key for measuring the success of future invoice-to-Cash projects.”- Sonali Nanda, Vice President, Product – HighRadius.”

Keeping this in mind, the experts at Genpact and HighRadius partnered to form the STAR (Straight Through Accounts Receivables) framework.

Aligning the STAR for Successful AR transformation

The STAR framework was developed with the intent to build an ideal AR function for the clients. The framework balances efficiency and effectiveness in equal measure. It embeds automation, AI & analytics across process, policy, and digitization while keeping business insights and values outcomes as primary objectives.

The STAR framework allows organizations to:

• Completely rethink how they run their invoice to cash function.
• Fully automate the entire invoice to cash process lifecycle – from invoice initiation to final settlement.
• Accelerate the journey towards touchless AR and understand their process maturity vs. best-in-class with the help of one composite metric called, Perfect Invoice Efficiency and Effectiveness Index (PIE²).

PIE² – A Metric to Measure All

Assessment of AR function needs a plethora of metrics, which is challenging during benchmarking. The PIE² (Perfect Invoice Efficiency and Effectiveness) index aims to simplify this process by being a single metric to measure all. It allows for target setting and benchmarking to reduce the cost of operation and enhance business value.

Here’s how the PIE² indexing works,

• The index picks the ideal weightage relevant to an industry or market with the specific nuances considered from them across three key efficiency metrics, and three effectiveness metrics of the AR functions.
• Perfect Invoice is determined by using a specific metric PIE² (Perfect Invoice Efficiency and Effectiveness) index that enables an understanding of the client’s I2C process maturity from efficiency and effectiveness perspectives.
• The results are shown in a single dashboard, enabling a simplified, single-page view of the AR performance summary.

Adoption of the STAR framework with PIE² indexing can bring tangible benefits to your organization in terms of boosting cash flow, delivering value-based outcomes, and improving customer experience.

Genpact and HighRadius bring together domain expertise and digital sophistication to enable the STAR framework for the invoice to cash processes.