Various ERP metrics can be leveraged to improve efficiency and profitability. One such metric is the quote to cash cycle which reports on the time it takes for a salesperson to move an order from the quotation phase through to a closed sale.
Anything your company can do to shorten this cycle is a bonus and improves cash flow. Accounting automation is just one of the many tools within an ERP system that can be leveraged for this purpose.
What Is Accounting Automation?
Accounting automation is the process by which an accounting task can be automated by the ERP system. A good example is routing a customer quotation for approval. Many
Steps in the Quote to Cash Cycle
Depending on the business, the quote to cash flow cycle can take days, weeks, or months. Large institutions with many layers of approvers may need more time to review and negotiate the quotation. And the higher the dollar amount of the cost quotation, the more time customers may need for consideration.
Typically, there are six steps in the quote to cash cycle. These include:
- Creating the quote
- Negotiation with the customer and final approval
- Contract and order management
- Receipt of payment
Shortening the quote to cash cycle enables a business to generate revenues more quickly. This improves cash flow. Orders can be closed more quickly, and sales teams can move on to the next prospect needing assistance.
Automation Shortens Quote to Cash Cycle
There are many areas in which ERP accounting automation can improve efficiency of the six steps in the typical quote to cash cycle.
In the quotation phase, a bill of materials or BOM prepared for the client can be automatically emailed to the sales representative for review and approval, then shared via email to the end client. Quotation creation can be automated, with easy access through the ERP to wholesale and retail prices, and stock levels. Other steps in the cycle, including invoicing and reminders, can also be automated.
Using Data to Improve the Cycle
Another facet of accounting automation is using data to improve the quote to cash cycle. After using each automation tool for several weeks or months, you can look at the data to see if automations helped improve the efficiency and speed with which payments were received. Then, after reviewing the data, you can make tweaks to the automation steps to see if the tweaks also improve speed and efficiency. For example, you can tweak the timing of various reminders such as past due notices to see if sending them out more or less frequently increases the payment rate.
Other Metrics for Accounting Automation
Among the many things within a business that can be automated, accounting automation is one that is easily overlooked. However, the time saved from manually routing documents or producing materials can go a long way toward improving other areas of your business by freeing up the accounting team’s time to take on new challenges. Take the time now to investigate your current ERP system and look for tasks that can be automated.