In Accounts Receivable, There Is No Room for Silos

accounts receivable is just one department that can benefit from ECM platforms...

Think about your favorite baseball team. Whether it’s the World Champion Cubs (gosh that sounds weird to say) or the lowly Twins, they each play with their own style. While that gives them a certain uniqueness, they both adhere to a larger set of rules; namely, those of Major League Baseball (MLB). If they each played under different rules or used different verbiage to describe different parts of the game, it would be very hard to get through an inning, let alone an entire game.

Have that idea in mind when you think about “functional silos” in an organization. As in our baseball analogy, functional silos are when different departments (re: teams) within a single organization (re: MLB) operate independently. Each might have its own agenda, goals or even objectives. As you might imagine, this is not a winning game plan. Operating this way is not only dysfunctional, but it can create unneccesary conflict. It certainly doesn’t help a business move forward.

Let’s take it one step further. Now imagine that individual players on those teams each had different languages and goals amongst themselves. That’d be an example of a “double silo.” Yeah, pretty messy. It does happen, though. Consider accounts receivable (AR) in any organization. Now, from the highest view it might look like a single function. Get closer, though, and you’ll see that there are several areas within it: order processing, billing, credit and collections, payment processing, etc. It’s quite the lineup.

Check out these numbers…

According to a recent survey by the Institute of Financial Management (IOFM), less than five percent of AR functions are totally integrated across the order-to-cash cycle (O2C). On the good side, 43 percent of teams report at least some degree of “formal coordination” between their groups. For the bad? A full 13 percent report no linkage or coordination at all. Unlucky indeed.

Silos are for Farming, not AR

You’re probably going to see this next point coming the way Big Papi sees a fastball coming over the plate. This lack of coordination can really hurt an AR department, and the business as a whole over time, Let’s say management charges the department with helping the overall goal of reducing cash flow risk. Simple enough, right? But if our separate little teams within AR continue to “play by their own rules,” they might each have competing goals that don’t drive AR forward at the same pace. The result? Trouble.

Let’s consider another example, this time in customer service. Let’s say a CSR decides to extend the payment deadline to a particular customer. Maybe they’re just in a really chipper mood that day. At the same time, folks in collections want to collect payment as soon as possible in order to reduce their number of outstanding payments. Or, proof of delivery policies and procedures, driven by the need to accurately account for products and services delivered, could compete with the billing team’s efforts to invoice customers as quickly as possible

Here’s another number to get you thinking. That same IOFM survey revealed that just seven percent of organizations have an O2C process that’s “owned” by one person. The truth is that many AR functions operate as a mix of in-house, outsourced, and/or off-shored teams. Talk about a challenge. I’d say something here about “too many cooks in the kitchen,” but I don’t want to mess up the analogy.

Tear Those Silos Down

In this context, silos are constructed as a means of maintaining control. That need arises out of either a lack of trust or fear. The person(s) can lack trust in others’ capabilities or in the available information. The can also fear the repercussions of not having a monopoly on their little kingdom, as it were.

So how can AR organizations work to rectify this situation? A great place to start is by ensuring that every function within AR is performing individual tasks based on the same information – the same set of rules. This is where an integrated enterprise content management (ECM) platform come in… as you suspected.

Managing information from a central location not only makes it easier to access across functions, but also enables more informed decision making by providing a view of all relevant information in one spot. Once an ECM solution captures a sales order, for example, it verifies that information against any existing data already in the system and automatically routes it to the next decision maker to continue processing the order. The best part? These integrations connect data to ensure the most updated information is available to everyone – no matter where they are in the company, or the country, for that matter.
With a common ECM platform, the entire AR team can be confident that they’re working with the same information. No more wasted time tracking down, verifying and double-checking information. The automation also leads to a huge reduction in errors, since there is far less manual keying going on. When everyone’s on the same page, there is far less finger-pointing and a lot more trust. The silos begin to crumble.

Sure, it may take time to totally eradicate silos that may have been years in the making. Still, bringing AR onto one ECM platform could be the best way to start breaking them down forever.

Talk about hitting a home run.

Posted by: Kelly Green
This entry was posted in Electronic Document Management, Enterprise Content Management and tagged , , . Bookmark the permalink.

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