Optimizing Cash Flow with Revenue Assurance

Revenue assurance allows electronics and high-tech companies to optimize processes throughout their order-to-cash cycles. With better processes, these companies are able to manage working capital more effectively, improve operational efficiencies, reduce write-offs and increase top-line revenue. The critical groundwork is thus laid for improved cash flow and high performance.

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Many electronics and high-tech companies have traditionally defined revenue assurance as a narrow set of activities focused on improving billing and collections processes.

While these areas are critical functions in the revenue-generation cycle, they represent just two sources of revenue leakage that exist across the value chain. Companies that focus solely on improving their finance functions, or implementing back-office point solutions aimed at billing and collections, are overlooking other potential revenue leakage points. They are doing little to shorten their company's overall cash cycle, sustain an improved cash flow or influence key financial performance metrics such as day's sales outstanding (DSO).

Accenture believes that a balanced focus on all the value drivers in the order-to-cash cycle is required to optimize revenue, rather than focusing only on improving operational efficiencies as a way to improve cash flow, as so many companies tend to do.

Savvy finance organizations at electronics and high-tech companies that are striving to achieve high performance recognize the limitations of point solutions. They know that a comprehensive revenue assurance approach is required that covers the entire order-to-cash cycle—from acquiring customers and extending credit to fulfilling orders and processing payments.

They also know that all the processes, organizational structures, systems and metrics that are related to these revenue-cycle components must fit together seamlessly to minimize revenue loss and drive bottom-line returns.

A comprehensive revenue assurance program can help electronics and high-tech companies improve cash flow by:

• Improving working capital efficiencies: In addition to focusing on the inventory function to do this, attention paid to the accounts receivable component of working capital can drive substantial value. Ultimately, receivables-related working capital requirements can be reduced by as much as 25 percent.
  
  
• Improving operational efficiencies: Doing this can cut up to 30 percent of costs from the accounts receivable and collections functions.
  
  
• Reducing write-offs: By identifying high-value/low-risk customers more effectively, and implementing continuous credit monitoring and strong dispute management processes, write-offs can be reduced by up to 15 percent.
  
  
• Increasing revenue: All customer interactions provide opportunities to improve the order-to-cash process. Paying attention to the customer experience helps to keep customers longer and increase the revenue stream.

Troy Barton is a partner in Accenture's finance and performance management service line and is its global lead for the communication and high-tech industry group.

Todd Sheerman is a partner in Accenture's finance and performance management service line. He specializes in executing order-to-cash and finance transformation programs enabled by process reengineering, technology, shared services and outsourcing.