An Inside Look at Reporting Structures within the O2C Operation
When the functions that comprise the order-to-cash (O2C) process are separated and disjointed, the result can be a poorly managed O2C operation that negatively impacts customer satisfaction. Organizations that are committed to providing outstanding experiences for their customers are always looking for better ways to integrate, coordinate, and streamline the various functions that comprise O2C. These related “departments” include Credit, Order Entry, Accounts Receivable, and Collections.
To find out how companies are integrating order-to-cash, the AR & O2C Network surveyed 100 organizations from a wide array of sizes, revenue ranges, and industry types; two-thirds (65 percent) were B2B companies. The report compiling their responses, “AR/Order-to-Cash Integration, Automation, and Performance Metrics,” sheds light on key aspects of O2C management, including reporting structures for the various functional areas.
Who Reports to Whom?
In analyzing the results of the survey, the researchers made the following observations about the functions that comprise O2C:
- There are great variations in reporting structures by function.
- In none of the functions do a majority report to the same title.
- Order Entry is most distinct from Accounts Receivable, followed by Billing.
While there is a complexity inherent in O2C that makes a holistic approach to structuring the functions challenging, the variations observed could be a consequence of the range of sizes of organizations surveyed.
Here’s a breakdown of reporting structures for the functions studied:
Credit. The largest group of Credit Managers (nearly one in four, or 24 percent), report to the Controller, with the second group (22 percent) reporting to the CFO. The third-largest group (14 percent) reports to the Shared Services Director, followed by the VP of Finance (13 percent), Accounts Receivable Manager (11 percent), and Treasurer (11 percent).
Order Entry. It’s not surprising that the largest percentage (30) of Order Entry Managers report to the Sales Manager/Director. The next-largest group (20 percent) report to the Controller, followed by 15 percent, who report to the Chief Customer Service Manager. Only 10 percent of Order Entry Managers report to the Accounts Receivable Manager.
Accounts Receivable. One in four (25 percent) of Accounts Receivable Managers report to Controllers. Approximately 21 percent report to a Shared Services Director, and about 14 percent report to their organizations’ CFOs.
Collections. The largest group (21 percent) of Collections Managers report to the Accounts Receivable Manager, followed by Controller (18 percent). There was a three-way third-place tie, with 12 percent reporting to the CFO, Chief Credit Manager/Director, and Shared Services Director.
As companies continue to take a more holistic approach to managing processes that directly affect their customers, it is likely that we will see more integration of O2C functions, with a greater movement toward aligning reporting structures under a common process owner.