Few processes are more important than lead-to-cash; it determines your customers' experience when interacting with your company. Yet for many organizations, the process is manual, full of bottlenecks, and generates often untrustworthy siloed data, lead-to-cash experts say.
With their unique vantage point, CFOs are well-positioned to lead the process transformation, Derik Quinn, managing director at Huron ES&A, said last week in a CFO.com webinar.
“Customers want a frictionless process,” he said. “This means, from the very first touch point that customers have with your company all the way through to them making a purchase and becoming a customer, they ultimately want that experience to be as frictionless as possible.”
Understanding lead-to-cash is especially important if your company is transforming, or is planning to transform, from a transactional to a recurring revenue model, because the success of that model is dependent on positive engagement with the customer over time. “It’s not just a one-and-done transaction,” he said.
CFOs who get the process right can shorten the close cycle, improve forecasting and reporting, improve collaboration with other units in the organization, more consistently apply regulatory changes, and pave the way for automation of slow, manual, error-prone processes, he said.
Creating a seamless process
For many companies, lead-to-cash is an overly manual process, a CFO.com survey of 150 executives found. There are other problems:
- Misalignment between what sales staff are doing and what finance wants
- Poor visibility into future revenue
- Slow handoff between sales and finance
“What ends up happening,” said Ian Dunckel, director at Salesforce CPQ & Billing, “a department or group that sits in between sales and finance is manually generating quotes out of Excel and running them by finance to make sure it’s not breaking any revenue recognition rules and the pricing’s right and isn’t discounting any single line item more than is allowed.”
Despite the problems in a system like this, executives often prefer to keep the status quo because they don’t want to make it harder for the sales team to generate new business.
Dunckel said he hears from executives who say, “‘I want to keep it wild, wild west’” on sales. “‘I want [sales] to be able to do whatever they want.’”
But that creates back-end problems, he said, because sales will give customers discounts, or a customized mix of products, different payment terms, or they’ll sell an outdated product or sell to customers the company isn’t targeting from a strategic perspective.
For the finance team, when deals come in like this, it’s hard to treat them as revenue. “I can’t book the deal that sales is closing, but maybe I still have to pay them for it,” he said.
Putting in guardrails
By transforming this process—moving to a system that manages lead-to-cash on an end-to-end basis—you improve the customer experience, speed processing (in part by automating those parts for which rules can be written), create “guardrails” around which deals that can be recognized as revenue, and generate data for better understanding the market and tweaking your products and processes, said Amit Patel, managing director of Huron ES&A.
“This goes back to the customer experience,” said Dunckel. “If they say they want to buy something, it shouldn’t take two weeks to turn that around. But these guard rails also protect finance against over-discounting, changing payment terms, selling the wrong products together or selling into markets that we don’t necessarily support or currencies we don’t necessarily support.”
Given the importance to finance that all the departments with a role in the process work together, it’s appropriate for the CFO to see the transformation as within its role.
“Finance doesn’t see it as part of their domain but it absolutely is and one of the first areas of partnership is between sales and finance,” Dunckel said.
Access “How CFOs can take the lead on lead-to-cash transformation.” Huron is a sponsor of the webinar.