Streamlined Sales, Hyper-Minimum Fraud

Profitable, Fraud-Free Business With Minimum Cost — Too Good to Be True?

Fast-moving consumer goods and food raw material distribution lines in Indonesia consist of two categories: modern market and traditional market, each with its own challenges. Selling to a modern market means managing cash flow due to longer payment terms. Selling to a traditional market means streamlining order-to-cash operations while dealing with (1) bad debt caused by manual invoicing processes and (2) fraud from heavy use of cash instead of digital payment. Sales and finance can end up conflicted, since both play an essential role in order-to-cash.

The Common Way, Not the Best Practice, of Order-to-Cash

The invoicing process typically goes: hardcopy invoices are sent together with the goods, a collector visits the store on the due date to collect payment in cash, the buyer receives a payment receipt as proof, and the cash is handed to the finance team, who reconcile it and issue a receipt to the collector as proof the payment was settled. The amount stated on the buyer's and collector's receipts should match what finance receives — the finance function exists to keep this flow in place.

One coconut supplier producing coconut oil, milk, and other coconut products faced a tricky situation. The owner emphasized the sales function to win market share aggressively, and the business ran well — until the finance team found a significant problem: the business was running at a negative margin, caused by bad debt and fraud from conventional invoicing and payment processes. Both contributed up to 5% of revenue. The owner realized he had to balance sales and operations with technology and digital payment.

On Handling Bad Debt

Most of the company's bad debt came from (1) long-due invoices that were not well processed and got overwritten by other invoices, and (2) partial payments from customers that were never fully paid. The finance team's delays in cash reconciliation, while the company pushed for more sales, meant invoices were getting overwritten. Adopting digital invoicing and digital payment matches each payment to each invoice individually, whether full or partial, so no invoice is left forgotten.

Paper provides digital invoices and payments with automatic reconciliation, complementing order-to-cash with automated payment reminders and a simple interface for buyers to list and track their orders, invoices, and payments.

On Handling Fraud

Using cash, the company suffered losses from counterfeit money and money theft by cash collectors — a difference in reconciliation data between finance and collector teams was the tell. Digital payment reduces potential fraud since it eliminates counterfeit money, minimizes collection operational cost, and lets money land directly in the company's bank account.

Paper offers many payment methods to ease the change management from conventional order-to-cash to digital. Credit card payments are also accepted, letting buyers get a prolonged payment term from banks. If a buyer is persistent about using cash, reconciliation across buyer, collector, and finance can still be streamlined, and all information about money flow stays transparent within authorized functions.

The Best Practice Has Been Written on the Wall: Digitalization

After adopting Paper, more than 85% of the payment volume of the business is now digitized, leaving fraud and bad debt ratios at nearly 0%. The business also experiences lower Days Sales Outstanding (DSO) and lower operational costs. Business owners can now balance sales and risk strategically by looking at real-time analytics.