For some time, Credit to Cash (C2C) has stood by a few tenets when it comes to measuring success. Both Days Sales Outstanding (DSO) and improved working capital have long been the traditional measurement of a credit department’s success. Frankly speaking, no one should be excited by these outcomes as they are merely the by-product of a well-rounded C2C process. So where do we go from here? It’s time to focus on the Total Customer Experience.
When thinking about the C2C process, it is easy to forget how every facet of the customer interaction with a company impacts the end results. We often look at delayed payments as a customer only problem, rather than looking internally at inhibitors within the processes that “touch” the customer.
While the primary touch point for a customer is often their collector, this is an active touch. A multitude of passive touch points exist throughout the process that can jeopardize the entire relationship. With a Total Customer Experience approach, passive touch points become critical areas of review. To approach the C2C process holistically, we need to look at every possible interaction point that touches the customer including:
- Contract Management
- Order Management
- Credit Management
- Invoicing and Billing
- Cash Application
- Systems and Technology
Just in Order Management alone I’ve seen dozens of places that could inhibit the customer’s experience. Here is one example: does the Order Management system apply the correct tax calculations or does it apply exemptions where appropriate? Think about that from the customer’s perspective for a moment. I became your customer because of certain guarantees (speedy delivery, quality product, quality experience). I provided you with documentation showing that I am exempt. I have communicated to you repeatedly that I don’t pay taxes, yet every invoice I receive from your company is wrong. At first the problem might just be a nuisance, but over time, the slight error starts to become more and more frustrating to the customer. Frustration leads to longer pay cycles and, eventually, consideration to find a new supplier.
Taking the same example above, the conceived small problem causes a chain reaction through the entire process. Your cash application may have to treat the transaction manually if the auto-matching logic doesn’t manage short payments well. Collections might be calling the customers for short pays, when in fact they are adjustments. Invoices are generated to the customer for the remaining balances causing duplication and erroneous payments, which eventually need to be refunded. It’s also possible the customer paid the tax then a credit was issued, so now you have unapplied cash that must be managed. All the additional touch points through the C2C process create cost to the business by way of additional printing and labor.
But in my experience, once these problems within the process are resolved, customer behaviors start to change. Trust is renewed and frustration starts to ebb. Customers no longer see the interaction as a burden and the payment process becomes uninhibited. As payments start to roll in closer to terms, the DSO naturally reduces and working capital becomes free. Hence the idea presented earlier, these are just the after-effects of an improved process, rather than the initial target.
Ultimately, a renewed focus on the Total Customer Experience takes these touch points and turns them into actionable areas of improvement. Capgemini’s solutions community is filled with people with specific experience in F&A functions that can be invaluable to any business and what they bring with them is experience in multiple business models, where they can leverage past experience in future deployments. By working with our clients to make their customers the number one priority, together we achieve success.