Order-to-cash: Why consolidation is critical for SaaS success

Many organizations continue to store bookings, billing, and revenue data in separate systems, leading to time-consuming reconciliations and reporting bottlenecks. This fragmentation creates data silos that limit business insights.As a result, their visibility is scattered along with their data. Lots of finance teams are still trying to manage O2C using ERP-based or ad hoc engineering-led solutions, but this approach falls short for all kinds of reasons. 

Custom-built engineering solutions simply don’t scale well. They become increasingly fragile as pricing complexity increases, leading to costly maintenance and operational inefficiencies. And point solutions like Stripe and QuickBooks create even more data fragmentation, resulting in all manner of manual reconciliations and revenue leakage.

“We frequently observe that upstream systems inadequately capture the data required for the revenue accounting process and often will inconsistently use the data that is captured upstream. This leads to manual interventions by the revenue accountants to collect, validate and correct the upstream data in order to accurately perform revenue accounting. The lack of systems expertise for the contract-to-revenue process is a frequent obstacle in improving data quality and automating the revenue accounting process.” 

– Jeff Johnson, Executive Director, Ernst & Young LLP

The Problems with “Franken-Stack” Home-Made Solutions

These kinds of legacy-based, duct-taped “Franken-Stack” architectures result in an unwieldy amount of complexity. Take SOX compliance-Companies struggle with audit readiness due to discrepancies in bookings, billings, and revenue data. The numbers simply don’t match. It takes weeks to prepare revenue reporting and annual audits because the data doesn’t tie out, as PagerDuty’s director of business applications explains…

“We’re not in the business of making billing software. You don’t want to have to change your billing system — that’s why you want to get it right from the start.”

— Alisa Liebowitz, Director of Business Applications at PagerDuty.  

What about sustaining growth through all kinds of complex sales motions and customer segments? Keep in mind that the way your sales team is closing deals will change dramatically in the future—new products, usage-based pricing, multi-year agreements, or acquisitions can quickly overwhelm and upend existing systems. But as your business grows, the number of manual interventions needed for different customer orders and contract variations multiplies exponentially. “Our homegrown billing system was manual and delayed the sales cycle,” adds Alisa. 

Faced with the limitations of their jury-rigged architectures, finance leaders are left with three suboptimal approaches, none of them very good: 

• They can use spreadsheets to supplement a basic billing system, but this approach lacks scalability and compliance control. 
• They can upgrade an accounting application to ERP, but those implementations are notoriously costly, time-consuming, and require extensive customization for modern monetization models. 
• Or they can try to extend their CRM to bridge the O2C process, but when it comes to financial reporting and compliance purposes, CRM data is notoriously unreliable.

“Engineering teams are focused very appropriately on making sure things are running smoothly, that the product is going out the door, that the features are on time. They don’t necessarily see the entire back-end of the finance team. The finance team has a bunch of pieces of tape and some gum, the thinking goes, so they’ll work the extra hours to just figure it out.” 

— Jane Koltsova, Senior Director of Global Revenue at PagerDuty. 

The Solution: Consolidate Your Financial Data For Insights and Innovation

Our humble recommendation to finance teams struggling with creaky, jury-rigged O2C architectures? Just say no. 

A single order-to-cash system consolidates bookings, billing, and revenue data — providing end-to-end traceability. This eliminates data silos, reduces manual intervention, and accelerates financial close processes:

• It reduces manual errors. A single O2C system eliminates the need for manual data entry between disparate platforms, reducing errors and improving accuracy.
• It improves visibility. A unified system provides real-time insights into the entire O2C process, enabling teams to track orders, identify potential issues, and make data-driven decisions.
• It helps you move fast. Automation of tasks like invoicing and payment collection accelerates the O2C cycle, reducing delays and enhancing efficiency.
• It enhances customer experience. Streamlined processes lead to consistent and timely billing, reducing customer inquiries and improving satisfaction.
• It delivers seamless cash flow management. With a single source of truth for financial data, businesses can optimize accounts receivable management and improve cash flow predictability.
• It drastically simplifies compliance. A centralized system ensures regulatory compliance by providing an auditable and transparent view of customer transactions and financial records.

When your system can handle complex billing structures and revenue recognition right out of the box, then your finance team can support innovative deals without creating extra work. You can grow at the pace of your creativity. 

“What inspires me, if I look at other companies or other organizations around me, is those organizations which are constantly reinventing themselves are looking to use technology to improve how we deliver services to people around us,” says Shrikanth Akkiraju, CIO/CDO of Philips.  

Key Components of a Unified Order-to-Cash System

Consolidating your Order-to-Cash (O2C) process into a single system is an exercise in insight and agility. It streamlines the entire sales cycle from order creation to payment collection, minimizing errors, improving visibility into customer data, enhancing cash flow, and ultimately increasing operational efficiency. It’s a financial architecture that doesn’t imprison you, but instead enables you. 

Look for a solution that offers the following key features and capabilities:

• Traceability across orders, invoices, and revenue contracts
• Continuous accounting for real-time visibility and forecasting
• An order-to-revenue data model that ensures regulatory compliance

Here is a suggested basic architecture template:

Learn more about how Zuora can help you streamline your Order-to-Cash, all on one unified platform. Zuora handles the complexities of your recurring revenue business—whether you are managing subscriptions, consumption, or a variety of pricing strategies—so that you can focus on the next chapter of your growth journey.