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I recently posted on ways in which companies can streamline the customer invoicing process to ensure invoices are paid on time, keep DSO low as well as provide a strong cash flow. I also described how errors, inaccurate data and other issues in the billing cycle can result in late invoice issuance, delays in customer payments and increase the accounting staff’s workload. I concluded that the most effective way to speed up customer invoice processing and reducing errors is though an integrated software system that combines sales order entry, shipping notifications, accounting journal entries and invoice creation within a single, workflow-enabled application.  In this post, I’m going to describe how SAP Business ByDesign’s process-centric design enables an integrated order-to-cash cycle. The order to cash cycle is critically important because it represents a company’s major, if not sole source of revenue and cash flow. To illustrate this point, I’m going to take you slightly upstream in the “02C” cycle to the sales quote (some refer to this as the quote-to-cash cycle). SAP Business ByDesign is a cloud-based integrated business management solution. Its CRM functionality is completely integrated with the supply chain and financial functions to form an end-to-end process. In fact, the CRM, supply chain, financial and other functions are delineated more by user access rights than organizational or functional boundaries. To initiate the process, a sales representative can create a quote within Business ByDesign and deliver it to their customer. In addition, from within the sales quote and order screens, the rep can check product availability to determine if they can meet the customer’s delivery requirements. This “ability to promise” check is also critical to the company’s revenue recognition in that if their goal is to maximize revenue in the current period, the ATP check helps ensure they can meet that goal by delivering and billing the product in the current period. This is a critical item on which accountants don’t normally focus but by collaborating with their colleagues in sales management, they can help focus the company’s efforts on generating near-term revenue. I’ll discuss this more in a future blog on sales strategy.

Having received an acceptance from the customer, the sales representative can now create a sales order. She does this by opening her Sales Orders work center and opening a new sales order “with reference” by referencing the previous quote to forge another link in the accounting trail. Business ByDesign also automatically populates the sales order with data from the customer’s master data including “ship-to” and “bill-to” addresses and contacts. Recall from my previous post that a common cause of late payments is something as simple as issuing an invoice with the wrong billing address or contact. Placing the responsibility on the sales person to make sure this information is always up to date can help reduce payment delays by ensuring the invoice doesn’t get lost. Once submitted, depending on the type of business and the rules configured in Business ByDesign, the sales order is either routed to a supply planner or to the warehouse where the order is shipped and a goods issue document is created in the system. Upon receiving a workflow notification that the customer’s order has shipped, the sales representative can now trigger the invoicing process. She does this by opening the Customer Invoicing work center and selecting from a list of items to be invoiced. She checks the source documents for accuracy, creates and then releases the invoice to the customer. This action also automatically creates a (debit) journal entry in Business ByDesign’s accounts receivable general ledger account along with a corresponding credit entry in an appropriate revenue account (the shipping process also created appropriate entries in inventory and related accounts). This illustrates how SAP Business ByDesign’s workflow crossed organizational boundaries from sales to the supply chain or warehousing function to the accounting function. In addition, the invoice creation step generated a workflow which delivered an alert to the accountant’s general ledger work center in box, notifying her of the new posting. The accountant can pull up the journal entry detail and the use the system’s document flow to see an graphical view of the document trail from the initial sales quote, order, goods shipment and general ledger postings. In the event of a billing dispute, late payment or other problem, the document flow will save the accountant countless hours of research to resolve the issue. It also provides a solid audit trail for financial reporting purposes.

For many companies still struggling with stand alone systems, separate business functions and paper-based business processes an integrated solution such as SAP Business ByDesign can improve efficiency and reduce billing cycle errors. And since Business ByDesign is delivered on demand, the solution is very affordable for SMEs and subsidiaries of large corporations looking to streamline their order-to-cash cycle and improve their cash flow.

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  1. Former Member
    Hi Jim,

    Your focus on invoicing is insighful, and adopting a “right first time” attitude will lead to errors and re-work in Finance.

    Can you confirm if there are any links or use of the standard SAP FSCM solutions, Dispute Management, Collections Management, Credit Management and Biller Direct?

    1. Former Member Post author
      Hi Mark

      Thank you for the feedback. The FSCM solutions are “extensions” of the ERP Financials solution and are separate from Business ByDesign. We currently have integration scenarios for ERP customers who want to deploy ByD to their subsidiaries. These integrations address GL structures for reporting and not the processes addressed by FSCM.


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