- As customers we experience various company’s order to cash process (OTC) whenever we buy something. Which company do you believe has a ‘great’ OTC process? Why?
- Which portion of the Order to Cash (OTC) process do they see as the most vulnerable to theft, fraud or failure of some kind? Explain.
- Who in a company should be responsible for the controls of that company’s Order to Cash (OTC) Process? Why?
- What key (1-2) competencies does the person responsible in a company for the Order to Cash (OTC) need to have? Why?
1. As customers we experience various company’s order to cash process (OTC) whenever we buy something. Which company do you believe has a ‘great’ OTC process? Why?
Amazon has a great order to cash process for the customer. The process is quick. An order is placed and arrives either the same day or the next business day. Returns are allowed within 30 days and they are willing to make exceptions upon request. I have even been able to make return without having to send back the item. All of these benefits make for a wonderful customer experience but I am sure that is an administrative nightmare.
I would agree with you that Amazon has the best order to cash process because of the way they are customer focus and the ease of use. I think they probably have a limit or a range depending on how much the items are and its worth it to pay for shipping back to the warehouse.
Amazon was the first company that came to my mind as well. Another company that comes to mind is Zappos. I think of Zappos as an online shoe retailer, however, they have clothing in their inventory as well. The order-to-cash process is seamless. If you place an order before 1 pm PST time your order is shipped next business day for free. Also, if you have an issue with your order and you would like to exchange an item. You can call customer service and they will ship out the new item next business day for free “trusting” that you will return the current item within the allotted time frame, Returns are free of charge.
2. Which portion of the Order to Cash (OTC) process do they see as the most vulnerable to theft, fraud or failure of some kind? Explain.
The part of the OTC process that is most vulnerable to some type of failure is the order entry process. In the order entry process, it is necessary to ensure that the order is complete and accurate. The main risk of the order entry process is messing up the order in some way that results in lower sales or bad debt.
3. Who in a company should be responsible for the controls of that company’s Order to Cash (OTC) Process? Why?
Someone without involvement in the process should be responsible for the controls. Given the nature of the process, it is necessary to ensure that segregation of duties is maintained consistently. If I am able to create, modify, or approve a order or release, then I should not be responsible for the controls.
4. What key (1-2) competencies does the person responsible in a company for the Order to Cash (OTC) need to have? Why?
The order to cash person needs to be meticulous in terms of details to ensure that the appropriate segregation of duties have been put into place and that they are aware of organizational changes to update the roles accordingly. They need to ensure that the system has been configured with the appropriate blocks to avoid fraud.
Great strike Tamekia, detail oriented person to ensure the segregation of duties – no one person starting and ending a transaction. This will safeguard the process, thereby increasing performance and output which lead to customer satisfaction.
Question 1: As customers we experience various company’s order to cash process (OTC) whenever we buy something. Which company do you believe has a ‘great’ OTC process? Why?
I think Amazon has an amazing Order to Cash(OTC) process. As a front interface to a warehouse of millions (that’s my guess, seems like it could be billions) of products, Amazon makes a transaction quick and easy, finding searched from items for various vendors, offering best prices, and even used price inventory. Checkout is done accepting multiple forms of payment, a variety of shipping options, and easy returns. It’s OTC is so effective, one could argue giants like Amazon are causing the decline of the “Big Box” stores. Yes, I was a Toys R’ Us kid!!
Scott, I typically do not read my classmates responses to the weekly questions until AFTER I submit my own replies. So, in reading your post, it makes me smile because as I replied to question 1, I anticipated other classmates would identify Amazon as a company with a great OTC process. I believe Amazon is definitely the most prominent company that comes to mind. Amazon has become the gold standard in so many areas of OTC, logistic, and information management. Along with its effective and efficient OTC processes, Amazon has its Amazon Web Services (AWS) at the core of its strategic infrastructure. Amazon’s ability to lead the industry in OTC processes in an efficient way is what gives Amazon its competitive advantage.
James, I knew Amazon was going to be the process of choice, and I usually like to be a little different. But I just had a great experience where I ordered something on Amazon and it was delivered the VERY SAME DAY. So, I was on the Amazon Band wagon!! Glad I could me you smile!
Question 2: Which portion of the Order to Cash (OTC) process do they see as the most vulnerable to theft, fraud or failure of some kind? Explain.
I think all of the processes in the OTC process are vulnerable to theft, but I think the invoicing process has the potential for the most theft. Without segregation of duties, an invoice could be sent for more than what was ordered or received. Then the payment would be made on goods that were not received by the company. The over billing that occurs could be a “kick back” to someone. It’s very important in the OTC process to ensure that you pay for what you receive.
I would hope that there is some monitoring activity being performed that ensures that the invoice matches the goods received as this could easily get out of hand.
Question 3: Who in a company should be responsible for the controls of that company’s Order to Cash (OTC) Process? Why?
I think that someone outside of the OTC process should be responsible for the controls. If you’re a part of the process, and develop/monitor the controls set forth to avoid fraud, then you would be possible be able to circumvent those controls and commit fraud. Ideally that person/department would be higher level management this way they can insure that the controls align to company standards and policy.
Hi Scott
I absolutely agree with you. Like I also said in my comment earlier, the person responsible order to cash process should be someone who has no involvement and interest in the process. Segregation of duties is a must when it comes to controls. A person who can or approve orders should not be responsible for the controls of this process.
Question 4: What key (1-2) competencies does the person responsible in a company for the Order to Cash (OTC) need to have? Why?
I think the person responsible for the OTC process in an organization really needs to have the superior quality of paying attention to details. The person in charge must ensure that the transaction is complete and followed exactly as requested. 100 Widgets are ordered, 100 Widgets are shipped, 100 Widgets are received, 100 Widgets are invoiced for, and 100 Widgets are paid for. The details of making sure the entire transaction is completed and completed correctly at every step of the process.
Scott,
I agree with you the core competency of an OTC process manager is phenomenal attention to detail. There are debits and credits flying all around this process; it is multi-dimensional. That being said, I wonder what the segregation of duties in such a process is like. It is certain the invoicing and receivables will likely be separated, but to what extent does that separation continue to maintain a low-risk infrastructure. I’m sure the persons involved in this process are also very close in proximity communicatively and operationally. So that’s where I think another competency comes in, being concise and communicative about the flurry of orders and transactions that must be going on in day-to-day functions.
1. As customers we experience various company’s order to cash process (OTC) whenever we buy something. Which company do you believe has a ‘great’ OTC process? Why?
I think most of the popular online retailers have solid OTC processes. Amazon, eBay, Best Buy, Target, etc. all allow for fairly seamless experiences. From the point of sale, a customer can place an order and in most cases receive product within a few days. I know that Amazon has a very good return policy, however, there are times where I hesitate to purchase there if I have any doubts about the product itself. I may in those cases, purchase from Best Buy or Target because they have a physical presence that allows me to return or exchange in person. Those occasions are rare, but I do think there is a value-add in that. I’m curious if returning to a physical location rather simply through the delivery services impact the complexity (either makes it more or less complex) processes.
Hi Nathan,
I am happy that you included online retailers in general as opposed to just amazon, because I agree that this technology exists among all the retailers you mentioned. Amazon certainly comes to mind first because of the seemingly limitless things you can buy with a few clicks. In fact, much of their success can be attributed to the innovation in online retail, whereas eBay operated on a more user to user basis. It seems now that although transactions happen among users, going through the OTC process at Amazon is crucial in developing the security for purchases. eBay had issues with fraudulent sales early on, and it wasn’t until the institution of this technology that those processes could ensure a safer transaction.
2. Which portion of the Order to Cash (OTC) process do they see as the most vulnerable to theft, fraud or failure of some kind? Explain.
The scenario I keep thinking of is returns. In the past while working in retail, I know a significant amount of loss prevention was spent on monitoring returns activities. In those physical situations, I think it’s clearer the types of frauds that can occur; i.e. someone that picks up a new items entering the store and walks over to the returns desk and wants a refund or store credit.
Other scenarios, I am thinking warehousing/distribution can be vulnerable points where theft or a process failure can occur. How many times have we not received the correct item from an online order, or an order is lost or routed through a longer route.
Hi, Nathan, I agree that returns can be a problem, tons of fraud related to this performed by individual customers, reflecting that the payment collection process is also vulnerable since bank account fraud and credit card fraud is very common.
It is interesting that you mentioned about distribution process, cause i do have couple experiences of lost packages, not clue it is the responsibility of carrier, deliver person or the company’s warehouse. But clearly, the company covered the loss in most cases. And there are many false report on lost packages simply because customers are cheating.
Nathan,
I did not think of the vulnerabilities relating to ‘physical situations’ … you provide great examples. I agree, in retail stores, if there is a lack of controls, or even ‘weak’ controls in the OTC process, ‘bad actors’ will jump at the opportunity to capitalize on the opportunities that exist from these control gaps. Requiring a valid receipt which contains inventory numbers that can be tied to a sale is an example of an OTC control that mitigate risks you convey in your post, – Good post!
Return fraud cannot be eliminated, however retailers can take a few preventive measure to reduce it. If the company finds that that certain customers do a lot of returns, they can use the notes field of their POS system to input directions or information for employees. For example, the notes could warn cashiers of additional steps to take when dealing with these customers, or show that the person has a history of “warehousing” merchandise. Retailers can also put a tag on their merchandise, especially clothing, which if removed, causes the merchandise to be not returnable.
Nauman, I agree. I have always been curious about companies that require you to provide your drivers license to return something. I have never questions it, but why? What would they do or say if I returned 50 items that month. I understand organizations put measures in place to deter fraud. I think every organization must assume some level of it.
3. Who in a company should be responsible for the controls of that company’s Order to Cash (OTC) Process? Why?
A CFO or financial controller would accountable for and have ultimate ownership of the OTC process controls. Those controls would be developed at the appropriate layers of management and would obviously differ based on the industry and the type and size of the business. For instance, a small or medium size company with limited products or services may require a simpler set of controls around its OTC processes while say a global pharma/consumer healthcare company would a vastly more complex groupings of OTC controls in place.
I would consider CFO as a key stakeholder in OTC process and yes, CFO can be the process controller, since this is the one who really understand the importance of a secured and efficient OTC process, so that the guidelines or control actions can be more detail-orientated, and more sufficient. And yes, different size of business and different industry have various focus over the controls, they have different priority in the process as well as business objectives.
1. What key (1-2) competencies does the person responsible in a company for the Order to Cash (OTC) need to have? Why?
I think the key competencies the OTC responsible person should possess a high quality/extensive financial background/experience and a strong understanding of risk management. As OTC is deeply embedded in the financials of any company, it is critical that this individual be able to leverage robust financial experience and couple it with risk management knowledge to be able to understand where vulnerabilities may lie and develop and implement appropriately strong controls.
Absolutely Nathan. I also think attention to details is an important competency for the person responsible for the OTC process in a company to have, so he can make sure orders don’t contain any mistake, and that the quantity ordered match with the invoice and the shipping as well.
1. As customers we experience various company’s order to cash process (OTC) whenever we buy something. Which company do you believe has a ‘great’ OTC process? Why?
I think online retailers generally have great OTC process, in terms of amount, and range. With tons of orders every day, those companies need to schedule great amount of fulfillment, shipment and invoice creation. They require high efficiency of transaction processing as well, including returned orders’ refunds.
I have to agree most retailer that deals with a lot of orders all have good OTC process because if they didn’t they probably won’t be around. I think for retailer this is probably the process you need the most to make sure the customer going through this process are satisfied.
2. Which portion of the Order to Cash (OTC) process do they see as the most vulnerable to theft, fraud or failure of some kind? Explain.
There couple subprocess within the OTC, ie. order entry, invoicing, order fulfillment and payment collection. All of them have certain types of threats. I think the most vulnerable portion also brings most direct and severe loss to the company, that is payment collection. This step involves a third party except customer and company itself, the bank or card provider is also responsible for this step, and card or bank fraud is the most experienced fraud in our daily life, and it will bring direct profit loss to the company.
Very interesting Xiaozhou. I never really thought about credit card fraud and the payment collection process. I guess that can be a very scary element of fraud for a company. I assume most credit card fraud is a liability to the credit card company themselves, but a company also has to consider this factor into it’s collection processes. I’m sure monies are delayed because of fraud, at the very least.
3. Who in a company should be responsible for the controls of that company’s Order to Cash (OTC) Process? Why?
There is clear responsible person for each step within the process to make sure everything processed correctly. In terms of the person responsible for the controls, which should not be involved in the direct process, can be the key stakeholder in the higher level. This person should have the right to set up compliance applied over OTC process and have the overall monitor. For example, define the SOD, assign the incompleteness procedure, configure payment tolerance, etc.
Hi Hana,
I like your opinion of in terms of the person responsible for the controls, which should not be involved in the direct process, which reflects the segregation of duties.
4. What key (1-2) competencies does the person responsible in a company for the Order to Cash (OTC) need to have? Why?
First, this person should understand the security principles and have knowledge in information risk management, so that he or she can have the effective view of OTC control, and provide guidelines on SOD and overall compliance.
Second, the responsible person should have strong leader’s personality including leadership skills, communication skills and decision-making skills, since he or she need to provide clear guide of the control of the OTC process, and need to communicate with employees responsible for each portion of the process. Besides, important decisions on control over the OTC process should be made effectively.
Xiaozhou,
Very good thoughts on leadership skills. I suspect many of the skills that we (classmates) will collectively state in our replies to question 4 will tie in directly with the three skills you mention. The importance and criticality of controls in the OTC process dictate that leadership is required at all levels of management within a company.
1. As customers we experience various company’s order to cash process (OTC) whenever we buy something. Which company do you believe has a ‘great’ OTC process? Why?
Most of my online retail experience have been with Amazon and ebay because according to me they have the best order to cash process. It is simple and fast and reliable. With features like Amazon prime you can get your orders the next business day or 2 days after. They are pretty flexible and allow up to 30 days for returns. They accept various forms of shipping, and various forms of payment for checkout including paypal. They are so effective the experience is so smooth and seamless.
2. Which portion of the Order to Cash (OTC) process do they see as the most vulnerable to theft, fraud or failure of some kind? Explain.
I think everypart of the Order to cash process could be vulnerable to theft, fraud or failure, however I believe that order detail entry process as well as invoicing are the most vulnerable. The risks associated with the order entry process is that customers data, as well as their payment information could be collected by hackers if the data entry system is not well secured. When it comes to the invoice process, I think it could be changed to more than the buyer owes, and someone would benefit from the extra amount.
3. Who in a company should be responsible for the controls of that company’s Order to Cash (OTC) Process? Why?
Someone who is outside of the order to cash process should be responsible for the controls. Someone who is neither remotely or closely involved and who has no interest in the process. Otherwise if the someone who is part of the process develop and monitor the controls, then there is a high chance that that person will commit fraud or act in a manner that involves his own interest. Segregation of duties should be maintained to avoid that.
Hi ,
Good point that you don’t want the people developing the process but don’t you think that the people who are in that process should be responsible/ held responsible to maintain those controls? They are the people that are actually doing the work for the process.
I agree someone outside of the OTC cash process should be responsible for the controls as well. This will lessen the chance of fraud. Someone within the process can leave gaps/loopholes that they can then exploit. Also an individual who knows that the controls that they put in place will be reviewed for completeness is less likely to commit fraud. A person outside of the OTC process is the perfect candidate to review for inaccuracies.
4. What key (1-2) competencies does the person responsible in a company for the Order to Cash (OTC) need to have? Why?
The person responsible in a company for the Order to Cash (OTC) process need to be detailed oriented so he cannot miss any incomplete transaction. And to make sure that order details match with the shipment details, the received quantity, and the invoice details. He should make sure that every transactions are complete.
1.. As customers we experience various company’s order to cash process (OTC) whenever we buy something. Which company do you believe has a ‘great’ OTC process? Why?
Wise has a well-organized order to cash process for customers. The process is hustle free and very convenient. A customer can place orders, select delivery method (date and time) as offered by a vendor, and method of payment. Depending on the item, the return date varies. The system is automated. Meaning as customers select item(s) the system verifies availability, bills, then validity delivery date. There are a lot of allowances for returns. You can return an item for refund or exchange and the return shipping cost is shoulder by the vendor.
2. Which portion of the Order to Cash (OTC) process do they see as the most vulnerable to theft, fraud or failure of some kind? Explain.
All portion of the Order to Cash (OTC) process is important and could create vulnerability. Each portion must be treated with the level of risk associated with that portion. For the most part, order processing, pricing, payment are high on my list.
I really cannot pinpoint any portion to be of greater risk than the other, looking at the entire process I will look more into the ordering and payment as the most vulnerable to theft, fraud, or failure of some kind.
The reason is that payment could be made through fraudulent means or payment information could be hacked; and since orders are placed manually, there could inputting error. This two could leave some huddles for the customer and the vendor.
3.. Who in a company should be responsible for the controls of that company’s Order to Cash (OTC) Process? Why?
In my opinion, all department should manage their aspect of the process with an oversight or control by internal control or management – a person that is not part of the process. Because Marketing has a different look and goals, finance has a different goal and looks; distribution has a different look and goals. Everybody wants to meet their target and the verification requirement could different at every level. Thus, control should be set as per the department; internal controls ensure implementation with an oversight by management. If one person must be chosen for control purposes, I will pick a person that is not connected with the process in no way.
4. What key (1-2) competencies do the person responsible for a company for the Order to Cash (OTC) need to have? Why?
Two key competencies the person responsible in a company for the Order to Cash (OTC) needs to have are:
• a customer relationship (internal and external) – all the activities of the process is geared toward an excellent experience for the customers while generating revenue. Internally, all partners should be treated with great customer relations. This will set the foundation for employees actions toward customers (external) – lead by example. It could also be motivational; employees could gain confidence and respect then work as required. With a great relationship with all department, the person could easily make thing happened; and
• financial/accounting knowledge – the second if not the first purpose here is revenue generation. The process needs a person who understands the pluses and minuses of all financial actions – credit evolution, payment term, and condition, collection, etc.
1. As customers, we experience various company’s order to cash process (OTC) whenever we buy something. Which company do you believe has a ‘great’ OTC process? Why?
I believe Sephora has a good OTC process. As a big fan of Sephora, I often buy cosmetics through Sephora’s website. Once I complete the steps to buy, I will receive an email which tells me the order number is confirmed, and a list of the cosmetics I just bought. I can see a charge is pending in my credit card. After one or two days, I will receive another email shows the order has been shipped. Once I receive the package, Sephora will charge me the fee. Sephora completes the steps of order to cash. However, the invoice is created and sent to the customer before shipping.
2. Which portion of the Order to Cash (OTC) process do they see as the most vulnerable to theft, fraud or failure of some kind? Explain.
I think the most vulnerable step to vulnerability or failure would be documenting the customer order. If the orders are not noted accurately, especially when the orders are taken manually. After the wrong products are made or the wrong specifications are used, customers would unpleasant with the products, the reputation of the company would be influenced, and purchase returns would cause losses for the production.
3. Who in a company should be responsible for the controls of that company’s Order to Cash (OTC) Process? Why?
In an order processing system, there is often a cross-departmental kind of analysis, from sales and accounting to inventory and transportation. I think there should be a team or department in charge of the order management process so that a person in this team or department can take care of the controls of company’s order to cash process.
Beryl,
I agree that the responsibility of the controls in a company’s OTC cycle is shared among a number of departments, This is because with varying functions of the process from order placement, invoicing, shipping, and billing – I can not imagine one person or group being entire responsible. However, with that said I do believe with reference to a control environment it always starts with management and the tone they set.
4. What key (1-2) competencies does the person responsible in a company for the Order to Cash (OTC) need to have? Why?
He or she must have the abilities of responsible and attentive, and the background of finance or accounting. This person will be able to manage sales order management, Finance and Accounting, invoice data entry and management, and customer service for collections, to enable businesses to streamline this cycle and optimize the process.
1. As customers we experience various company’s order to cash process (OTC) whenever we buy something. Which company do you believe has a ‘great’ OTC process? Why?
My family (wife and I) have become “high-volume” users/customers of Amazon Prime. It is amazing how efficient Amazon’s online shopping port is. From the Pre-Sales activities (for example: searches, price comparisons, shopping cart activity) through the payment activity, the Order-to-Cash process is thorough, and provides a pleasant user-experience.
2. Which portion of the Order to Cash (OTC) process do they see as the most vulnerable to theft, fraud or failure of some kind? Explain.
Although every portion during the OTC process presents and opportunity of fraud in some form or fashion, I would say the payment activity provides the most vulnerable opportunity for fraud. The payment process provides “bad actors” the opportunity to retrieve customer private data. Payments submitted via stolen or suspicious accounts is also possible if OTC controls are not tight/effective.
3.Who in a company should be responsible for the controls of that company’s Order to Cash (OTC) Process? Why?
I believe a combination of teams within a company are responsible for creating, implementing and monitoring controls within the Order-to-Cash process. The sales team (management) should work closely with the internal audit team in establishing best practices OTC controls. Once the controls have been
designed, they then have to be implemented. Once implemented, controls need to be monitored on a regular basis, and evidence of compliance must be captured and readily available for submission when proof of effectiveness is required. The internal audit team should be responsible for scheduling regular audits to ensure a ‘checks-and-balances’ process with the OTC process. Although the sales management and internal audit teams provide first-line involvement in establishing controls, ultimately the corporate audit committee and executive team are also responsible because their actions must cast a shadow of commitment to controls that prevent fraud in the areas of financial processes.
The combination of team make a good sense, I agree single person could not control everything effectively.
That’s right, internal audit team is responsible for apply the control over key business process, in this case, the OTC. And you mentioned a well-defined structure to apply controls, from the sales team , internal audit team up to corporate audit committee and executive team, this could be a good practice. Thanks for sharing your thoughts.
4.What key (1-2) competencies does the person responsible in a company for the Order to Cash (OTC) need to have? Why?
Self-Assertiveness – aggressive, obtrusively energetic especially in pursuing particular goals. [1]
Punctilious – (1) Strictly attentive to detail, meticulous or fastidious, particularly to codes or conventions. (2) Precise or scrupulous [1]
The job responsibilities of a person responsible for overseeing a company’s Order-to-Cash process requires adherence to strict compliance rules; thus, the person who fills the job in this are must possess the aforementioned competencies.
References:
[1] https://www.merriam-webster.com/dictionary/self-assertive
1. As customers we experience various company’s order to cash process (OTC) whenever we buy something. Which company do you believe has a ‘great’ OTC process? Why?
Actually, lots of companies have great OTC process (probably the competition?).
Because of lack of time, I do a lot of online shopping/orders, from Macy’s, JCPenney, Amazon, Costco, Ali Express etc.
I think the best I have come across so far is Amazon, because I have a prime account, my items get to me the next day or even the same day occasionally. I even have some items on Subscribe and Save (a process where I get the same particular product – e.g Diapers – every month or bimonthly).
I especially love amazons process because when I don’t like something I buy for some reasons, I have the option of letting them come pick up the item for return from my house.
I also love the idea that most of the time, Amazon’s customer service is almost always readily available to attend to your concerns.
These all make Amazon a company with a ‘great’ OTC process
1. As customers, we experience various company’s order to cash process (OTC) whenever we buy something. Which company do you believe has a ‘great’ OTC process? Why?
I would have to say Amazon probably has the best order to cash process because of the ease of use for their customers. OTC comprise order entry, provision of goods, billing and incoming payment. They are so good at it that most small to medium size businesses use their platform to sell their product. When you make an order on Amazon they’ll process your order and invoice you immediately and for some orders, they could have your order delivered within hours. This is probably why they are the best at it because they are able to complete the order so fast.
1: Most eCommerce companies have a great OTC process, but I would like to name Swappa, which I used recently to purchase an apple watch. Swappa is an online platform used for buying and selling electronics, particularly mobile devices. A user can quickly look up a prouct by entering a brief product description, the search retrieves multiple hits for the same product, which shows the product, listed by different sellers at different prices. It’s very easy to communicate with the seller and ask them questions about the market. You can even negotiate the price. Once reached an agreement, an order for the product can be placed and preffered shipping speed can be selected. Once an order is placed, the transaction is monitored by Swappa and any inquires related shipping address, refund etc, are instantly responded to by their staff. Swappa collects it’s transaction fee from the customer and forwards the remaining amount to the seller.
2: The most vulnerable area to fraud and theft in the OTC process is the return process. Consumers feel much more confident when they know that they would be able to return the product if they don’t like it. Return fraud increases particularly during holiday season, when some consumers use the product and return it after holidays. Some customers would also attempt returning a product to a store they didn’t purchase it from.
3. So basically every individual involved in the OTC process needs to take ownership of their respective process area. For instance, if a person in the warehouse is responsible for loading the goods for shipping, it’s his/her responsibly to load the correct product and quantity based on the sales order received. Senior Management of the company, particularly those responsible for establishing OTC related controls, ultimately take ownership of the controls.
4. The whole purpose of the entire OTC cycle is generating revenue. So basically, good customer service skills and sales skills would be a must here. If you can create a pleasant purchasing experience for the customer and sell your products effectively and in a timely manner at a profit, then the OTC process is a success.
Which portion of the Order to Cash (OTC) process do they see as the most vulnerable to theft, fraud or failure of some kind? Explain.
I would have to say incoming payments would be the most vulnerable to fraud because of fraudulent buyers. A lot of people could be using stolen credit cards or doing chargebacks for fraudulent reasons. There was an article saying a couple scammed Amazon out of 1.2 million dollars in merchandise. I attached the article below.
https://nypost.com/2017/10/02/couple-steals-1-2-million-from-amazon-in-return-scheme/
Who in a company should be responsible for the controls of that company’s Order to Cash (OTC) Process? Why?
I think there should multiple people within multiple departments that are responsible for the controls of OTC because in the OTC process there is supply chain dealing with the shipment, warehouse people dealing with packaging the good and returns. Also, you have the accounting department dealing with the payments/ credits or the process. The people making sure the controls are in place would be the internal auditors and Quality assurance people.
What key (1-2) competencies does the person responsible in a company for the Order to Cash (OTC) need to have? Why?
The person responsible for OTC need to be attentive and have good communication skills. The need to be attentive because there are a lot of ways you could mess up especially dealing with a large number of orders. They also need communication skills because the OTC process deals with multiple business units and if something goes wrong you need to act quickly to get things corrected especially since things are shipped out so quickly.
Question 2
I think the biggest vulnerabilities to the OTC process lie in the order placement process. Generally, the process for placing an order is secured, and insured. However, issues can exist in the user end that can compromise the payment information they upload into the site. Some sites don’t have the security processes of Amazon and may leave a path for a third party to get a glimpse of incoming order information. On the other end, invoice fulfillment could also lead to a problem if not properly secured. The real problems lie in the security of the PII for customers. Failure to protect means the instantaneous risk of compromising personal financial data.
Rob,
I think you bring up a good point about the vulnerabilities in the order placing process. With the digitization of businesses and the emergence of ecommerce it appears a lot of these threats are more likely to be tech influenced. I agree that some sites are more vulnerable than others with not having secure payment processes. However, technology aside – I wonder how much human error plays in some of the failures in the order placement process
Question 3
The team responsible for the controls around the OTC process would most likely be the risk management team managing the IT infrastructure behind the process. The controls would be placed by a department outside of the operational department responsible for the fulfillment of the OTC process. And this would exclude IS auditors as they would act independently, gauging the efficacy of controls in place. The bridge between the two would be the risk management team, responsible for mitigating risk of fraudulent incidence.
Amazon has a great order to cash(OTC) process. I love how they have different categories as far as “Amazon Choice” (Amazon selects an item that is highly rated) and “Bestseller” items.They offer one-click purchasing, where are you find the item you want to purchase and select the 1-Click order button and the item is shipped to the address on record and the payment method on record. 1-Click ordering is not available for all purchases. A hold is immediately placed on your credit card account. If you have an Amazon account, the order is then shipped to you free of charge in two business days. You can elect to received order notifications in order to track your order throughout the fulfillment process.
2. Which portion of the Order to Cash (OTC) process do they see as the most vulnerable to theft, fraud or failure of some kind? Explain.
I believe the Bill-to-cash portion of the Order to cash process is the most vulnerable. During the the Bill-to-cash process there is a chance of unauthorized discounts, double billing, inventory markups, and the data entry errors. This is more an issue in an organization that relies on their employees manually entering transactions into the invoice database. This can also be an issue where an organization doesn’t have proper controls, such as SOD, to check behind individuals who have access to the company funds/invoicing system.
What key (1-2) competencies does the person responsible in a company for the Order to Cash (OTC) need to have? Why?
I believe the person responsible for an organization’s OTC process needs to have great analytical skills, like attention to detail, decision making, and problem solving skills. These competencies will enable them to identify and troubleshoot any issues that may arise during the OTC process..
2. Which portion of the Order to Cash (OTC) process do they see as the most vulnerable to theft, fraud or failure of some kind? Explain.
I think all the steps again, just like the p2p process has some form of vulnerability or ability to fail. For example, the wrong order could be received and/or processed, the delivery/shipment could be received wrong and even if received right could be delivered to the wrong address ( this has happened to me several times, I get some good neighbors who live on the next street and come to my door to tell me they received a package from my address, and vice versa- I receive packages at my address that belongs to another address, and sometimes the address is not even near me), etc.
Again, it’s like a pack of cards, if one step fails, all the other steps are prone to fail in some percentage (0-100%).
But again, with everything that has to do with payment/cash, I would say the Payment process is vulnerable to theft and fraud. The controls around the payment process has be built in a secure way and with checks to ensure that the process leading to the payment steps are legitimate.
In this day and age, I will like to believe a lot of e-commerce business have a “great” order to cash processes. This is because with the digitization of the business environment everything appears to happen in real time. For example with the likes of Amazon and E-Bay, there is always the option of same day delivery (and if you have Amazon Prime – you can receive your order in as little as 2 hours). Hence, streamlining and digitizing the order to cash process to have customer receive orders as quickly as possible results in business recognizing revenue just as fast.
With all things considered, I believe the reporting process is the most vulnerable to fraud. This is because when businesses do not have an efficient order to cash cycle, there is also the risk of recognizing and realizing revenue before it is actualized. This falls under the completeness, cutoffs, and existence assertions for auditors and begs the questions –
Have all revenues of the entity been reflected in the financial statements?
Are only revenues applicable to the reporting period presented in the financial statements?
Were sales of products or services made to valid customers, do they meet the criteria for valid sales, and did they actually occur in the reporting period?
If there is the opportunity to commit fraud by overstating revenues, it will occur in the reporting process of the order to cash cycle.