Client Overview
Our client is a leading Solar EPC (Engineering, Procurement, and Construction) company based in Noida, known for its expertise in designing and installing large-scale solar power plants across India. Despite their technological leadership, they struggled with inefficient financial operations, particularly in their Order to Cash (O2C) process. These inefficiencies led to delays in invoicing, cash flow constraints, and a high Days Sales Outstanding (DSO) figure, hampering their ability to scale operations.
Challenges
1. Manual Invoicing and Billing Errors: The company relied on manual processes for generating invoices. With increasing project volumes and complexity in contracts, invoicing errors became frequent. This delayed payments and created discrepancies in revenue reporting.
2. Delayed Accounts Receivable (AR) Management: Follow-ups for outstanding payments were inconsistent, resulting in a DSO of 65 days. This delay in collections put pressure on their working capital, as cash flow became unpredictable.
3. Complex Cash Application: Payments received from clients often lacked clarity in remittance information, causing delays in reconciliation. This inefficiency required significant manual intervention to match payments with outstanding invoices.
4. Inconsistent Reporting: The lack of real-time visibility into the O2C cycle made it difficult for the finance team to track overdue payments and project future cash flows, further straining financial planning.
CODN Solutions’ Approach
To address these challenges, CODN Solutions implemented a customized O2C solution designed to automate and optimize the client’s financial workflows.
1. Automated Invoicing System: We deployed an automated billing system that integrates with the company’s project management software. This allowed for the generation of accurate, timely invoices linked to project milestones, reducing errors by 95% and cutting the invoicing cycle from 10 days to 6 days.
2. Enhanced Accounts Receivable Management: Our team implemented a structured AR follow-up mechanism with automated reminders for overdue invoices. This included setting up escalation protocols to ensure timely communication with customers regarding pending payments. The DSO was reduced from 65 days to 45 days within six months.
3. Cash Application Automation: We introduced an automated cash application system that leveraged AI to match incoming payments with outstanding invoices. This reduced manual reconciliation efforts by 80% and increased the accuracy of payment processing. As a result, cash flow tracking became more precise, helping the client plan for future projects with greater financial clarity.
4. Real-time Reporting and Analytics: Our solution provided the client with real-time reporting dashboards, offering visibility into every step of the O2C process. This allowed them to monitor overdue invoices, track customer payment behavior, and forecast cash inflows more accurately.
Results
– Invoicing Efficiency Improved by 40%: The automated invoicing system reduced errors and delays, allowing invoices to be generated 40% faster, from 10 days down to 6 days.
– Reduction in DSO by 30%: With improved AR management, the client saw their DSO drop from 65 days to 45 days, accelerating the speed of collections and improving cash flow stability.
– Increase in Cash Flow by 25%: The combination of faster invoicing and more effective collections increased the company’s cash flow by 25%, providing them with the liquidity needed to fund new projects and meet operational demands.
– Operational Cost Savings of 20%: The streamlined O2C process and automation of manual tasks led to a reduction in administrative overheads, saving the company 20% in operational costs related to financial management.
– Higher Customer Satisfaction: With more accurate and timely invoicing, the client received fewer payment disputes, improving their relationships with customers and fostering a more reliable revenue stream.
Conclusion
By partnering with CODN Solutions, the Solar EPC company in Noida was able to transform its O2C process into a streamlined, automated function that directly contributed to improved cash flow, reduced operational costs, and enhanced financial visibility. These improvements enabled the client to scale their operations more effectively, supporting their goal of expanding solar energy installations across India.
CODN Solutions continues to support the client with ongoing optimization of their financial processes, ensuring they remain efficient and adaptable as their business grows.
Key Metrics
– 40% Reduction in Invoicing Cycle Time
– 30% Reduction in DSO (from 65 to 45 days)
– 25% Increase in Cash Flow
– 20% Reduction in Administrative Costs