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  • CFO.com | US

Keeping Receivables Rolling

At DSC Logistics, ''keep 'em moving'' applies to orders and payments as well as to warehousing and delivery. Third in a series of articles on using software to improve the order-to-cash cycle.

After the two systems are synched up, payment terms, carrier rates, and any other parameters are fed into the customer’s system. When a customer places an order, the carrier’s delivery of the appropriate goods initiates an EDI 214 transmission to the customer; the customer’s system then automatically authorizes a payment to DSC. Price discrepancies are kicked out for investigation.

Looking for Trouble

Although discrepancies must be investigated manually, Lilek insists that the greater the amount of automation in the accounts receivable process, the fewer the instances of manual intervention — and the less time and money spent researching and correcting errors. Exorcising manual postings from the order-to-cash cycle, she adds, is fundamental to good accounting, especially in a business with a high volume of transactions.

Lilek contends, however, that improving “data matching” is even more important to the order-to-cash cycle. Data matching refers to linking a payment with its corresponding invoice number and order number — which are usually different. That’s another reason Lilek favors eliminating invoices entirely: no invoice number means that only the order number need be linked to the customer’s remittance.

It took time to build the three-part information technology system that keeps DSC humming. In 1998, Fieldman and his team integrated DSC’s proprietary warehouse management system, which tracks and manages orders and inventory for 30 U.S.-based distribution centers, with a customized transportation system from i2 Technologies. In 2003, the company completed the integration of the OneWorld ERP software, tying the entire system together by running the applications on multiple AS/400 servers.

The effort was shepherded by both IT and operations executives because many of the changes were driven by customers who believed that improving DSC’s order-to-cash cycle would benefit them, too. For example, now that transactions are pushed through DSC’s system faster and with fewer errors, its customers enjoy faster, less-error-prone settlement.

Beyond Order-to-Cash

Lilek believes that one of DSC’s business strengths is maintaining consistent processes from department to department across the company. During the next year, she wants to exploit the company’s order-to-cash technology to pursue other business-process goals.

For instance, eventually she’d like to eliminate the paper check-cutting process when DSC must pay its own suppliers. Today, a manager for the general ledger tells an accounting staffer that a batch of invoices needs to be reviewed and posted, and that checks need to be cut and mailed.

In an automated scenario, it would be DSC’s financial system that was loaded with payment terms and other invoicing criteria. An invoice submitted for payment would prompt an electronic funds transfer if all the criteria were met. The bigger challenge would be getting DSC and its suppliers to adopt such a system, says Lilek, but she has high hopes — she’s been through something like this before.

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