Order To Cash Process


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Order To Cash Process

Order To Cash Process

Over the last few years, during the global recession, the focus of every business has shifted so that it concentrates less on profit and more on cash flow. Companies have made retaining cash within the business - by minimising expenditure - a top priority in their corporate strategies. Value engineering (otherwise known as Value Management) is an incredibly significant and useful tool in reducing cash outflow whilst still maintaining the perceived value of the end product.

Value Engineering in Housebuilding

Value engineering has been widely practiced in house building of late, an industry which has been hit harder than most during the economic downturn of recent times. To be successful, this route of money saving requires the input of every department in the design process. Without the knowledge and expertise of all parties involved in the construction of a house - from the design team to the finishing trades – the maximum benefit cannot be gained, and potential savings could be lost.

The Role of the Architects and Design Team in Value Engineering

The process begins with the design team, consisting of architects and engineers. During the ‘boom’ years of the early decade, little thought was given to practical design, as attention was placed upon maximising revenues and not on cash outflow. However, in a changed climate, the design team - with management support and advice - can carry out a review of their unit portfolio.

With thorough yet careful thought, a range of what was once hundreds of different house and apartment types can be reduced to a handful, consisting of those that are functional on a number of levels: for example, being cost effective to build, or with a proven record of being popular with potential purchasers.

Studying Drawings for Cost Saving Measures

The next stage is for the plans and details of those core house types to be examined for areas where cost savings can be made. In some cases, the entire layout can be redrawn in order to include an additional bedroom, for example – an asset which will increase the selling price of the unit. It is also at this point when the specification of the properties will be assessed.

It may seem to be penny-pinching, but even removing or altering the smallest items can provide substantial savings in the long term. For example, the number of sockets can be reduced in order to meet NHBC minimum guidelines, or the thickness of plasterboard can be changed to 12.5mm thick instead of 15mm.