Order to Cash (O2C), or the receiving and processing of customer sales, is one of the key business processes to be monitored within organisations, as the efficiency of the incoming cash cycle can severely impact organisational health and growth prospects.
In recent years efforts to improve and optimise O2C have become a strategic priority. Continuous Monitoring has allowed companies to drill down into the transactions executed in ERP systems such as SAP and Oracle and to identify the business process exceptions that result in leakage of effort and revenue and suspicious activities.
As food for thought, we have listed the top 10 O2C exceptions.
| Context | Exception | Description | |
| 01 | Sales Orders | Price Changes | Monitor changes to prices and approvals of those changes. Changes to price impacts revenue forecasts and cash flow and may also indicate unauthorised or inappropriate discounting. All changes to prices should be reviewed and authorised. Approval should be carried out by a different person to the person who made the change to reduce risk of conflict of interest. |
| 02 | Sales Orders | Payment Terms – Changes or Use of Non Standard Terms |
Changes to payment terms or use of non standard payment terms impacts cash flow and margins. Sales teams may offer preferential terms to close a deal however the adjusted terms may be inappropriate and unauthorised. |
| 03 | Sales Orders | Discounts ? Unusual or Excessive | Inappropriate or excessive discounting impacts margins and cash flow and can indicate inappropriate customer relationships or conflicts of interest. |
| 04 | Sales Orders | Free Goods and Samples ? Excessive or Inappropriate Use |
Free goods and samples can be inappropriately used resulting in loss of assets. Monitoring trends by business unit / sales person / customer identifies areas where further review may be needed. |
| 05 | Customers | Customers and Employees with same details | Identify Customers and Employees having same or similar details (address / bank details).If an employee is also a customer or has close links with a customer this can indicate a conflict of interest and potentially inappropriate activities. |
| 06 | Customers | Incomplete Customer Records | Missing or incomplete master data can lead to inaccurate orders, shipments, receipts and incorrect financial statements. Incomplete information on customers can cause problems in invoicing and customer relationship. |
| 07 | Customers | Duplicate Customer Records | Duplicate Customer Master records for same customer may cause data integrity issues such as duplicate customer order entry as well as unnecessary maintenance and reconciliation effort. |
| 08 | Credit Notes | Unauthorised / Unusual Credit Notes | Credit Notes can be inappropriately used or unauthorised. Monitoring trends by business unit / sales person / customer identifies areas where further review may be needed. |
| 09 | Deliveries | Deliveries without reference to a Sales Order | Deliveries without sales orders may lead to inappropriate or fraudulent shipments. This in turn leads to bad receivables. |
| 10 | Deliveries | Deliveries above defined tolerances | Excessive over delivery to a customer can indicate inappropriate or fraudulent activities resulting in financial loss. |