The Order to Cash process or O2C carries monumental weight when it comes to a company's success. While a lot of companies focus more on the processes that happen before an order has been placed, such as marketing, branding or sales, having just a fast and accurate O2C process system can provide the company with benefits that ease up the entire sales process. In the era of digitalization, an automated O2C process system is essential. Here, we will take a dive into how a fast order to cash process system can save you time and money.
What does 'Order to Cash Process' mean and how is it relevant?
The Order to Cash process encompasses the entire order processing system of a company. Starting from when a customer places an order, to the collection of payment and reporting, everything falls under the O2C process cycle. Even though the process works separately from external activities such as sales and marketing, both processes align to benefit the company as a whole.
From the outside, the process may look like it only consists of receiving an order and being paid for it; in reality, it's related to a lot more factors. Such as-
- Order Management: Order Management is where the order to cash process begins. It refers to the process of a business receiving, tracking and fulfilling an order. It ranges from the order being placed to the customer receiving their product.
- Credit Management: Credit management analyzes a customer's financial standing to figure out and limit the possibilities of late payment or default. It can determine if a customer has the potential for upselling with additional goods or services.
- Order fulfilling: A part of the system also includes inventory management to an extent, as inventory counts need to be updated fast so that a customer does not go through a transaction for a product that is unavailable.
- Invoicing or Billing: An invoice is created against an order or service being provided. The order management system takes over the process and generates invoices. These can be printed or sent by email.
- Cash application: Cash application is the final step where the payment is recorded in the company's books.
- Reporting: Post-sale analytics of the transactions and reporting provides the company with an insight of whether it has been accepting payments as expected or does it have gaps such as pending invoices and late-paying customers that may impact positive cash flow.
Having the entirety of the ordering process and more under the umbrella, the O2C process needs to be optimized in order to benefit the business.
How does the Order to Cash Process System work?
In a time when optimization and digital transformation have taken over almost every aspect of our lives, technology without a doubt, plays a massive role in the order to cash process system as well. Optimal management of the O2C process requires a system that is quick and efficient in analyzing and providing relevant data to the company. Having the entire process systematically automated means the data passing through can be shown to the company personnel in real-time without any time lag, and that is one of the core features of the order to cash process system. The entire system works in order to automate manual tasks and enhance the O2C process so that the company can benefit from it.
How does Order to cash process system reduce your billing time?
Order to cash is a wide range of things, and having all of them under one automated system leads to a ripple of saved time throughout the entire billing cycle. Here's how.
- Order Management Optimization: A fast and automated O2C means an integrated order management system that ensures the notifications of an order must get an entire chain of processes in different departments running. Companies with the best O2C practices are 81 percent more effective at order management than those without - found a study conducted by IBM. This saves a lot of inside lag within multiple processes and ensures less time taken in the billing cycle.
- Credit Management Optimization: The Order to cash process system will have software do the credit analysis and take care of straightforward transaction approvals, which relieves workload and takes away the possibility of human error. Automated credit management makes accounts receivable simpler, and accurately analyzed credit guidelines also make sure you issue credit only to customers who meet the criteria.
- Order fulfillment Optimization: Automated software makes sure inventory count is updated in real-time, so that the process doesn't have to run for a product that is unavailable. It also means the time taken to cancel the transaction will be saved. It also includes generating a standard format for the orders received, so that it's easily decipherable by personnel working in the inventory, thus saving time there as well.
- Automated invoicing: Automation tools used in invoicing ensure maximum efficiency. Having one system taking care of integrated calculations needed in the invoice processing cycle means faster processing, reduced error and decreased processing costs.
- Easy payment collection: One of the major time lag issues are ensued by the delay in payment updates. A delayed payment update can cause confusion within that time frame, which can lead to inaccurate cash estimates. With an automated system working on this, the time taken to update payments is almost instantaneous. This not only reduces chances of miscommunication, but also improves the response time of the personnel working in accounts receivable.
- Reporting and Data Management: Interconnected software programs take data from every step of the order to cash process and answer questions like how long is a billing cycle and what are the errors that are affecting the time taken to end it. Software-driven data means accurate analytics that can be used to make profitable decisions for the company, both in time and value.
A fast and optimized O2C process system makes sure time is saved in every step, from taking the order to it being in the hands of the customer. It is an absolute necessity to have one to be a step ahead in time efficiency and achieve what's most important- customer satisfaction. Nuport's order management system is dynamic and is made for a variety of industries ranging from FMCG, construction goods, agriculture, electronics. One of the most important aspects of the order management system is that it is available on both mobile and web. It is easily categorizable and suitable for large quantities of SKUs even upwards of 10,000 SKUs. Companies with existing systems can easily integrate via ready APIs which makes the process immensely scalable. With an integrated mobile-friendly interface, sales and distribution teams can save your time without having to do repeated data entry. To get a fully personalized consultation, schedule a demo today!