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Author's profile photo John Hooks

Monetizing the O2C Cycle Quicker Using FSCM and Big Data

For most organizations, cash is king, and optimizing the order-to-cash cycle has become a strategic priority.

An equally important priority in today’s business environment is compliance with an ever-increasing and complex body of regulatory requirements. Regulations such as the Sarbanes-Oxley Act require that all business processes be effectively monitored; however, the complex nature of the order-to-cash cycle presents a number of challenges to the effective testing and monitoring of internal controls.

Because the order-to-cash cycle (see Fig 1) typically crosses several corporate functions, the resulting handoff from department to department can lead to error, fraud, and delays, resulting in reduced cash flow.  In addition, large amounts of data are typically housed in multiple IT silos, and these disparate sources make it difficult to gain insight into the critical data that underlies the entire process.

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Figure 1

The order-to-cash cycle is also prone to a high degree of risk, stemming from such issues as “rogue” sales practices that may involve excessive discounts or unapproved credit extensions; mismanagement of receipts; and cash fraud. Continuous monitoring can identify sources of revenue leakage, suspicious activities, and inefficient processes – ultimately leading to increased profits.

While many organizations rely on built-in controls provided by their ERP systems, these are often not fully implemented, and their focus is typically on operational efficiency, not compliance. Even when implemented correctly, there are benefits to independently monitoring ERP controls to provide the level of oversight necessary to assure their effectiveness and to support regulatory compliance requirements.

Big Data Analytics solutions provide an independent mechanism to automatically monitor internal controls effectiveness, supporting compliance with Section 404 of the Sarbanes-Oxley Act, and minimizing the risk of error and fraud. Using analytic technology, organizations can reduce the ongoing costs of regulatory compliance and the financial risks stemming from control gaps and weaknesses.  Big Data Financial Supply Chain Management (FSCM) solutions are multi-platform capable and work with any source of data, thereby providing the visibility critical to effective management of the order-to-cash cycle.

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