Hackett Research Summary

15 Hackett Recommended Metrics to

Evaluate Your Order-to-Cash Process
This e-book outlines the 15 metrics
recommended by Hackett group to benchmark
against World-Class organizations.

Source: Raising the World-Class Bar in Finance © HighRadius Corporation

Through Digital Transformation, The Hackett Group 1
 Table of Contents

1. Executive Summary 3

2. Order-to-Cash Process Metrics 4

3. Conclusion 12

4. About HighRadius 13

Source: Raising the World-Class Bar in Finance © HighRadius Corporation

Through Digital Transformation, The Hackett Group 2
Executive Summary

Hackett Value Grid: World Class Finance

Performance on an Empirical Level
Comparing your organization to peer group and
world-class organizations

The Hackett Value Grid shows how your baseline

performance compares to your peer group and to
world-class performers. World-class performance is
defined to be the top quartile performance in
operational efficiency and effectiveness process
metrics.

What is World-Class?
What does it look like, how is it different?
EFFICIENY EFFECTIVENESS
World-Class organizations are more World-Class organizations are more
efficient, by having: effective, by having:

Lower total costs Accurate decision making

cy
Faster cycle time Better alignment to business

Higher Productivity Optimized working capital

Monitoring performance helps the organization identify process issues

before they become a major problem that affects business outcomes.

Hackett group has identified top 15 metrics and benchmarked against the World-Class
companies based on efficiency and effectiveness of the processes. In this e-book, we
delve deeper into how best-in-class organizations compare with the rest in the order-to-
cash (O2C) cycle.

Source: Raising the World-Class Bar in Finance © HighRadius Corporation

Through Digital Transformation, The Hackett Group 3
Credit Management

1 Average Days It Takes to Complete New Credit Reviews

Efficiency Metric
EFFICIENCY
Best Practices from World-Class
Average days it takes to complete new credit
reviews  Organizations:

Implementation of best-of breed online credit

application
33% Automated correspondence for missing
cy information such as bank/trade references,
3days backups
Providing real-time tracking of application
2days status

Benefits:
Peer group World-Class
Improve customer experience with greater
World-class organizations are 33% faster in visibility
onboarding customers.
Reduced manual errors

2 Automated Versus Manual Credit Modelling Tools

Efficiency Metric
EFFICIENCY
Best Practices from World-Class
Automated versus Manual Credit Modelling
Tools  organization:
Automated stakeholder correspondence for
25% all credit decisions

Integrating with country-specific and industry

84% 75% cy specific credit agencies, public financials and
Insurance bureaus
Automated capture of the fields from the
16% credit application form
Peer group World-Class Benefits:
World-class organizations have faster and Standardize credit operation across various
more accurate credit operations with the platforms
help of sophisticated, automated and
Improved productivity to work on high value
dynamic credit modelling tools
customers

Source: Raising the World-Class Bar in Finance © HighRadius Corporation

Through Digital Transformation, The Hackett Group 4
Billing and Invoicing

3 Percent of Invoices Generated & Distributed Electronically

Efficiency Metric
EFFICIENCY
Percent of customer invoices generated and
distributed electronically
 Best Practices from World-Class
Organizations:

Adopt automated e-invoicing portal

8%
Deliver invoice according to customer preferred

58%
cy channel such as portal and e-mail

50% Track conversion of customers from paper to

e-invoice

Benefits:
Peer group World-Class
Self-service customer portal saves print+ mail
World-class organizations reflect lower costs
billing process costs by 8% in comparison Eliminate low-value tasks in billing and invoicing
to the overall database. such as dealing with paper, doing back-and-
forth

4 Average Time It Takes to Bill

Efficiency Metric
EFFICIENCY
Best Practices from World-Class
Average time it takes to bill
 Organization:

Self-service customer portal for viewing invoices

33%
cy Using a single portal which includes all relevant
backup documents such as PODs, BOls
3days

2days Streamlined collaboration between internal

teams

Peer group World-Class Benefits:

Lower payment cycles

World-Class organizations have been able
reduce their average time to bill by 33% thus
Improved customer experience
improving their cash inflow.

Source: Raising the World-Class Bar in Finance © HighRadius Corporation

Through Digital Transformation, The Hackett Group 5
Billing and Invoicing

5 Percentage of Invoices Corrected for Billing Errors

Effectiveness
EFFICIENCY
Best Practices from World-Class
Percentage of Invoices Corrected for Billing Errors  organization:
Automated invoice generation from ERP open
invoices

Inbuilt correspondence templates and packages

cy with auto-attached documents
3.0% 1.8%

1.2% Benefits:

Peer group World-Class Lower deductions

World-class organizations reduced billing Faster collections
errors by 1.8% by automating their billing Better customer experience
and invoicing

Percent of Customers Who Access Accounts via Web-based

6 Application

Effectiveness
Best Practices from World-Class
Percent of Customers Who Access Accounts via
Web-based Application  organizations:
Invoicing customers electronically via email,
portals
Allowing customers to pay in electronic payment
cm formats ACH, Credit cards and e-Checks through
payment portal
33% 42% Offering incentives to customers to bring them
onto Web-based portals
9%
Peer group World-Class Benefits:

Faster payments
Automated billing and invoicing helps top
Improve E-adoption
performers to reduce billing errors and create
an exceptional customer experience Better customer experience

Source: Raising the World-Class Bar in Finance © HighRadius Corporation

Through Digital Transformation, The Hackett Group 6
Cash Application

7 Process Cost per Customer Remittance

Efficiency
Process Cost per Customer Remittance EFFICIENCY

cy

Electronic Remittance <25% Electronic Remittance 25%-60% Electronic Remittance 61%- 95% Electronic Remittance >95%
Bottom Quartile Median Top Quartile

 Best Practices from World-Class Organizations:

Standardized processing for different e-remittance
Benefits:

types Easy e-adoption in payments

Automated aggregation of remittances from portals,
e-mails and EDI Lower cost in process payments

8 Automatic Remittance Posting Matching Rate

Efficiency
Best Practices from World-Class
Automatic Remittance Posting Matching Rate  Organizations:

Template-agnostic remittance capture

Aggregating the remittances from multiple

40%
cy sources( mails, EDI, web-portals)
75%
AI enabled payment matching & exception
handling
35%

Benefits:
Peer group World-Class

Reallocate users
World-class organizations have twice the
percent of hands-free cash posting with
Reduced costs
lower process costs

Source: Raising the World-Class Bar in Finance © HighRadius Corporation

Through Digital Transformation, The Hackett Group 7
Deductions Management

9 Average Dispute Resolution Cycle Time

Efficiency Metric
EFFICIENCY
Best Practices from World-Class
Average Dispute Resolution Cycle Time  Organizations:

Identifying deductions at Cash Application

A single repository for all the backup documents

30%
cy such as notes, claims across internal and external
teams
10days
Track deductions aging
7days

Benefits:
Peer group World-Class
Top Performers have established a dispute Improved recovery of invalid deductions
resolution process that requires less
Better adherence to big box retailers such as
escalation and speeds time to dispute closure
Walmart

Percent of dispute are not resolved by the initial resolver

10 & needs to be escalated within the management team

Effectiveness Metric
Best Practices from World-Class
Percent of Dispute are not Resolved by the Initial Resolver
& needs to be Escalated within the Management Team  organizations:
Providing visibility into resolution status and
progress of the dispute
5%
cy Seamless collaboration between internal teams
10%
Easing the research process by having all the
5% documents at one single place

Benefits:
Peer group World-Class

World-class organizations established a Lowers DDO

dispute resolution process that reduced
More bandwidth to work on invalid deductions
escalation by 5% (half).

Source: Raising the World-Class Bar in Finance © HighRadius Corporation

Through Digital Transformation, The Hackett Group 8
Collections Management

11 Process Cost per Collection Contact

Efficiency Metrics
EFFICIENCY
Best Practices from World-Class
Process Cost per Collection Contact  Organizations:

Providing a prioritized worklist for collectors

Adopting automatic correspondence approach

cy versus dial for dollar approach
$11.0 66% Having single source of truth across various
platform to access backup documents such as
invoices copies, claims documents
$4.0
Benefits:
Peer group World-Class

Design scalable collections operation

World-class organizations have established
automated collection process that enables Facilitates reaching out to a broader
lowered process costs by 66%. customer base

12 Collection Contacts per FTE

Efficiency Metrics
EFFICIENCY
Best Practices from World-Class
 Organizations:
Collection Contacts per FTE
Inbuilt correspondence templates and packages
with auto-attached back-up documents to save
time

cy Sending pro-active reminder to customer prior to

the payment due date

19,354 Automated correspondence to different

30%
customer buckets

5,786
Benefits:
Peer group World-Class
Restricting phone calls to only select high-risk
World-class organizations have established customers
proactive and strategic collections process
Reduce aging/ past dues
that enables 30% more contacts per FTE

Source: Raising the World-Class Bar in Finance © HighRadius Corporation

Through Digital Transformation, The Hackett Group 9
Collections Management

13 Average Days Delinquent

Effectiveness Metric
Best Practices from World-Class
Average Days Delinquent  Organizations:
Sending automated proactive reminders before
payment due date
60%
Predict when the customer is about to pay
cy using Artificial Intelligence
10days

4days Provide customers with self-service portal for

viewing invoices and making payments

Peer group World-Class

Benefits:

World-Class organizations leverage smart Improve working capital

automation and create direct bottom-line Reduce dependence on banks for short-term
impact by improving metrics such as ADD banking

14 Percent of Credit Sales Collected within Terms

Effectiveness Metric
Best Practices from World-Class
Percent of Credit Sales Collected within Terms  Organizations:

Provide incentives for early payments

12%
Enable payment features such as auto-pay,
schedule pay
91%
79%

Benefits:
Peer group World-Class

Improve Days Sales Outstanding

World-class organizations leverage smart
automation to improve process Minimize missed payments
effectiveness by 12%

Source: Raising the World-Class Bar in Finance © HighRadius Corporation

Through Digital Transformation, The Hackett Group 10
Order-to-Cash

15 Process Cost as Percent of Revenue

Efficiency MetricEFFICIENCY
Process Cost as Percent of Revenue Best Practices from World-Class
0.089%  Organizations:
0.014%
Ensure high employee productivity by
0.017% eliminating manual error prone tasks
56%
0.026% 0.040%
0.005% E-adoption from paper
0.009% cy
0.020% 0.011% Keep a track on high-risk customers to ensure
0.005% there is minimal bad-debt and write-off
0.013% 0.011%
Peer group World-Class Benefits:
Credit Customer billing Collections Cash application Deductions

Improved working capital and cash flow

World-class organizations are able to reduce
process cost by 56% in total by leveraging Easier cash management
automation technologies

Source: Raising the World-Class Bar in Finance © HighRadius Corporation

Through Digital Transformation, The Hackett Group 11
What Drives World-Class A/R Performance?

What should your digital transformation initiative

focus on?

It is beyond the point where companies are able to debate whether or not to initiate digital
transformation. The question is whether someone disrupts using digital transformation or get
disrupted by someone else’s digital initiatives.

To start with the digital transformation journey, finance execs should consider heavy investment in the
following areas:

Automation of clerical repetitive tasks across C2C

Core automation means that costs are low and effort is allocated in the right tasks

Single, integrated platform

More effective in delivering services to internal and external stakeholders

AI-driven automation technology

Low-error rates in tasks

Integrated reporting and analytics

Better decision making and insight

Using big-data and machine learning

Improved outcomes of A/R actions - faster, more effective collections

Conclusion
Digital transformation can play a major role in helping peer-group organizations catch up to their
world-class competitors. But the reality is that the definition of world-class will continue to evolve as
leading finance functions deploy smart technologies to transform themselves.

Thus, the quest for achieving world-class status never ends. Its future will require continuous
improvement of cost structure, effectiveness and stakeholder’s perceptions of how finance adds value
to the performance of the enterprise.
Assess yourself against best-in class peers.
Get a complimentary assessment of your O2C processes!

Source: Raising the World-Class Bar in Finance © HighRadius Corporation

Through Digital Transformation, The Hackett Group 12
 About HighRadius
HighRadius is a Fintech enterprise Software-as-a-Service (SaaS) company. The
HighRadiusTM Integrated Receivables platform reduces cycle times in the order-to-cash process
through automation of receivables and payments across credit, electronic billing and payment
processing, cash application, deductions and collections.
Powered by the RivanaTM Artificial Intelligence Engine and FredaTM Virtual Assistant for order-to-cash
teams, HighRadius enables organizations to leverage machine learning to predict future outcomes
and automate routine labor-intensive tasks. The radiusOneTM B2B payment network allows suppliers
to digitally connect with buyers, closing the loop from supplier receivable processes to buyer payable
processes.
HighRadius solutions have a proven track record of optimizing cash flow, reducing days
sales outstanding (DSO) and bad debt, and increasing operational efficiency so companies
may achieve strong ROI in just a few months

HighRadius’ Integrated Receivables Platform

Integrated Receivables optimizes accounts receivable operations by combining all receivable and
payment modules into a unified business process. The Integrated Receivables platform provides solutions
for credit, collections, deductions, cash application, electronic billing, and payment processing – covering
the entire gamut from credit-to-cash.

The HighRadiusTM Integrated Receivables platform stands out by enabling every credit and A/R operation
to execute real-time from a unified platform with an end goal of lower DSO, reduced bad-debt, and
faster dispute resolution while improving efficiency and accuracy for cash application, billing, and
payment processing.

HighRadiusTM Integrated Receivables leverages RivanaTM Artificial Intelligence for Accounts Receivable to
convert receivables faster and more effectively by using machine learning for accurate decision making
across both credit and receivable processes. The Integrated Receivables platform also enables suppliers
to digitally connect with buyers via the radiusOneTM network, closing the loop from the supplier Accounts
Receivable process to the buyer Accounts Payable process.

Source: Raising the World-Class Bar in Finance © HighRadius Corporation

Through Digital Transformation, The Hackett Group 13
 Corporate Headquarters
Westlake 4 Building (BP Campus) www.highradius.com
200 Westlake Park Blvd.
8th floor, Houston, TX 77079
(281) 968-4473

Source: Raising the World-Class Bar in Finance © HighRadius Corporation

Through Digital Transformation, The Hackett Group 14