Credit Management magazine December 2017

OPINION
Making the
magic happen
New trends in cash allocation and finance, and the
impact they can have on a business’ performance.
AUTHOR – Chris Sanders FCICM is Head of Accreditation – CICMQ
ELEMENTS of the ‘Order to
Cash’ process are a mystery
to many people. Generally,
people understand the
concept of credit control,
but tend to simplify this
into ‘you guys are the debt collectors
right?’ But things like billing are never
truly understood ; it is as though orders
enter a big cloud with ‘then magic
happens’ written on it, and hey-presto,
out pops an invoice.
Other areas of mystery include the
elements that sit at the end of the process,
for example cash allocation, and some
of the more interesting new finance
arrangements that organisations use
to manage net working capital. These
things may seem unrelated, but if the
processes that you have as a business are
not managed properly the effects can be
catastrophic.
A couple of years ago I was running
a workshop with a large cross-functional
team from a UK business. This group
was essentially a shared service centre
with team members involved in order
management, customer service, billing,
credit control, collections and cash
allocation. The workshop was to find
ways to improve cashflow, and after about
30 minutes the cash allocators asked why
they were there, given that this was a
‘collections issue’ and nothing to do with
them.
So, I asked what they think happens
if they stop allocating cash? Surprisingly,
not many of the cash allocators
could answer. It was the collectors and
the credit controllers who understood
their importance to the overall process.
They thought after about three days
cash collection activity would have to
stop. At this point in the discussions, the
cash allocators became more engaged.
The Recognised Standard / www.cicm.com / December 2017 / PAGE 42