The order to cash process (abbreviated as O2C or OTC process) is an extremely important part of the business process. The order to cash process is often an overlooked and underfunded opportunity to increase business efficiency, improve cash flow, and strengthen customer relationships. It is important for companies to identify opportunities, reduce the costs of the O2C process, and recognize the benefits of investing in smart solutions.
What is order to cash?
The process from receiving the order to payment of the invoice is included in the order-to-cash process. This encompasses the entire production process. The goal is to optimize this process so that all parts can perform their work properly. This requires time, money, and resources. Entrepreneurs are often less proficient in one of these three areas. But sooner or later, getting the order-to-cash process in order is a prerequisite for successful growth.
If an organization does not have this in order, it will often first notice it in its cash flow. But it can also lead to dissatisfied customers because the production process is poorly organized. In other words, the O2C process is one of those processes that can make or break your company. The result of this process can affect everything from customer satisfaction and cash flow management to employee satisfaction.
Order2cash process steps
The steps of the process obviously differ for each organization. Depending on the market, product, or service, there are important differences. For example, a car manufacturer has a different order-to-cash process than a consulting firm. But the main point is that the focus points in different organizations differ from each other.
In any case, the order-to-cash process always starts with booking an order. Then resources, time, and money must be made available. A planning system can be used for this. Then production takes place. In complex production companies, this process is linked to almost all other parts of the organization. For example, if poor HRM policy leads to high absenteeism, production, and thus the order to cash process, will be delayed. After production, delivery takes place. Invoicing usually occurs immediately afterward. The final step is aftercare and quality control.
Optimizing the order2cash process
The goal of an O2C process is to deliver goods to customers in exchange for money. But because the process has two sides, order management and accounts receivable, it is highly interdependent. Teams that manage these two parts of the process ultimately work in silos, which is not suitable for an efficient process.
While improvements are conceivable in every part of the order to cash process, Payt specializes in the accounts receivable process. The invoice to cash process. Many organizations think the work is done once the invoice is sent, but that is not the case. It is estimated that 30% of bankruptcies are solely due to a lack of liquidity, not a poor business model or poor return on investment. Moreover, the invoicing process is also a good time to check the quality of your products or services. Customers are happy to tell you how they experienced the product or service.
Using software to improve your order to cash process
To improve the order-to-cash process, order-to-cash software is the best option where possible. It forces you to think carefully about how you can optimally organize the business process. And once it is set up, it makes no more mistakes. There are various comprehensive software packages that automate a large part of the business process. The software ensures that the necessary resources are available on time and scheduled for timely delivery. Most organizations do not have such a complex production process. Automation is also important for these organizations.
What we have noticed is that few ERP or financial packages have a complete solution for the collection process. Payt is easy to implement by linking it to your financial package, and it provides immediate benefits.
Are you interested in more information about how Payt works and our solutions for your challenges in accounts receivable management? Please contact us, we are happy to help you with our comprehensive software solutions.