Order-to-Cash Efficiency:
3 Warning Signs for Distributors

The rapid advancements of the digital era are reshaping industries, and the electrical, HVAC and plumbing distribution sectors are no exception. As distributors grapple with the challenges of economic uncertainties and an evolving technological landscape, the efficiency of the Order-to-Cash (OTC) process is emerging as a pivotal determinant of success. Insights from a recent study conducted by IDC on behalf of Billtrust illuminate these pressing challenges and underline the need for modernization.

These hurdles aren’t mere operational glitches—they signify foundational issues distributors must confront to maintain their competitive edge and fuel growth. Here are three warning signs that signal the need for OTC modernization.

1Inadequate Connectivity in the OTC Process

The digital age is about easy connections, instant data and efficient operations. Yet just 15% of businesses have achieved a fully integrated OTC process rooted in real-time data, a statistic that highlights a deep-seated industry challenge.

For distributors, this gap translates to potential pitfalls: unpredictable inventory levels, prolonged order fulfillment and unpredictable cash flow. This lack of real-time data access touches every corner of the business, from procurement to customer satisfaction. And as the marketplace becomes even more competitive, this can result in diminishing customer trust and loyalty. Distributors must take proactive measures, prioritizing system integration, process refinement and enhancing data-driven decision-making capabilities to tap into the full potential of digital advancements.

2Inefficient Processes and Communication

The root causes of payment delays are multifaceted. Some businesses still rely on time-consuming manual processes, which are prone to human errors, leading to invoicing mistakes. Others might face challenges stemming from unclear communication around payment terms or even oversight by clients amid the hustle of day-to-day business.

For distributors in sectors like electrical, HVAC and plumbing, where timely deliveries and service are vital, such payment hold-ups can have cascading effects. To mitigate these issues, an overhaul is essential. By modernizing the OTC processes, distributors can introduce clarity, efficiency and speed. Adopting digital invoicing not only reduces errors but also offers a more straightforward interface for clients and overall better buyer engagement. Meanwhile, automating payment reminders ensures that payments aren’t missed simply because they slipped a client’s mind.

In an age when business is increasingly conducted at digital speed, it’s crucial for distributors to ensure their payment processes are not just keeping pace, but setting the pace, ensuring a smooth financial flow and robust business health.

3Outdated Employee Experiences

In the distribution world, while customer experience remains at the forefront, the significance of employee experience is becoming increasingly evident. Distributors’ true strength extends beyond their product lines to the dedication and expertise of their workforce. Every successful transaction, every satisfied customer, can often be traced back to a team working diligently behind the scenes. And while the experience of all employees is important, in today’s uncertain economic conditions, the experience of the financial professional who helps steward these organizations is more crucial than ever.

However, there’s a growing concern. Many businesses sense that their outdated OTC processes might be acting as barriers, preventing them from attracting and retaining the top finance talent they desperately need. Such bottlenecks can create a reputation of being out of touch or resistant to change.

Today’s finance professionals are on the lookout for roles that promise innovation and growth. They’re drawn to companies that are ahead of the curve, adopting the latest technologies and practices to drive improved financial outcomes. When a company’s systems appear dated, it risks not only operational inefficiencies but also losing out on the industry’s brightest minds.

To ensure they’re positioned as leaders in the industry, distributors must prioritize modernizing their OTC processes. By doing so, they achieve dual benefits: they streamline operations and present themselves as a prime choice for top talent. In a competitive market, having both cutting-edge processes and the best team to manage them could very well be the difference between merely surviving and truly thriving.

Steering Ahead with a Forward-Thinking Approach

The study cited above emphasizes the evolving role of the financial leader, spotlighting their pivotal role in steering businesses through tumultuous waters. Beyond providing financial oversight, today’s finance leaders are strategic visionaries, making decisions that determine the future of their organizations. For distributors, this entails investments in agile, efficient and adaptive systems and strategies.

The OTC process, traditionally perceived as a mundane backend operation, holds the potential to distinguish distributors in a cutthroat market. The goal isn’t just adaptation but visionary transformation.

The warning signs are clear: the time for distributors to revitalize their OTC processes is now. With strategic investments and forward-thinking approaches, these challenges can be transformed into opportunities for unprecedented growth. The onus is on distributors to make this transformative leap.