Efficient and reliable order-to-cash requires integrated systems
The cornerstone of a commercial operation is to get paid. It may sound like an obvious statement, but despite that there are several obstacles on the way from customer contact to the money actually sitting in the company account.
In industry jargon, the chain from when an order comes in until it is delivered and paid for is called Order-to-Cash, or O2C. The O2C process is a critical business process that helps companies generate revenue, build customer relationships, and improve operational efficiency.
The O2C process uses and generates a lot of data and often involves many systems and applications, making it extra complex. The process may look different depending on the company, but the main steps are generally:
- Order entry – The order is received from the customer, the order information is verified and the order is entered into the system. In this step, both e-commerce platform, ERP system and CRM system can be involved.
- Order fulfillment – The goods are picked and prepared for delivery. A WMS system is often used to manage inventory and manage the pick and pack process.
- Shipping – The goods are transported to the customer. A TMS system, combined with the services of a 3PL provider, is typically used to manage the transportation and tracking of the goods.
Invoicing – Create and send an invoice to the customer. The ERP system is often used to manage invoicing and payment terms.
Payment – Receive payment from the customer. A payment system, or external payment service, can be used to manage the payment process and the ERP system is used to match the payment against the invoice and update the payment status.
Cash management – The payment is reconciled against the customer's invoice. Here, a point of sale (PoS) system is often used to track and report all transactions and payments that have been made.
A process with many challenges
Among the biggest challenges to the O2C process are:
- Data management – the process generates large amounts of data which can be a challenge to manage effectively, especially when many different systems and applications are involved.
- Ensure the process is consistent and error-free – errors can lead to delays in delivery, invoicing and payment.
- Management of a large number of payment methods and currencies.
- Monitoring and tracking the process – especially difficult for large companies with complex supply chains.
An integration platform shortens lead times and improves liquidity
In the report "Business benefits with mature data and integration work" (Radar group, 2023), Swedish businesses state that "order-to-cash" is one of the flows where they have succeeded in automating the most with the help of data integration.
- 86% of the respondents experienced a significantly shortened time from customer order to the invoice being paid - and thus an improved liquidity in the company.
- The shortened lead time was explained by 70 percent of the respondents as being directly due to the integration platform.
Automate Order-to-cash with iCore
The benefits of automating the O2C process are many and can help companies improve efficiency, reduce errors and increase customer satisfaction, among other things.
Contact us and we'll tell you more about how we can help you always get paid on time!