Dissecting The Order To Cash Cycle: Simplifying Complexity With Technology
Order To Cash Conference
The order to cash process, or O2C cycle, which refers to the journey taken by an invoice as it transitions from order to payment, involves vast array of steps, sub steps and functionalities beyond the scope of the average Finance Executive. Traditionally manual process, the transformation to technology-based solution not only dramatically increases the speed and accuracy of the process, but it also adds the much-desired visibility into the status at any stage.
A comprehensive solution for the order to cash cycle should allow for the automation of data and documentation flow, arrival of payments and credits, as well as the tracking of any outstanding balances or payments. Streamlining the order to cash process not only simplifies the cycle but dramatically reduces the amount of time involved in collection, reconciliation and reporting.
The following guide will dissect the order to cash process, leading you through the necessary steps and functionalities that allow for greater understanding of the impact of this process in financially-driven organization:
Step 1: Configuring the Order and Purchasing Processes
The first step in comprehensive order to cash process is capturing orders and related data. This information should be entered in system that includes details such as the products and services being ordered, the associated costs, and the expected delivery and payment schedules. The order should be sent to the customer (invoicing) and shipping department (fulfillment) in order to move on to the next step.
Step 2: Automating the Invoicing Process
Once the order and data has been entered, an automated system can generate invoices that are then sent to the customer. This step includes customization capabilities to tailor the invoice to the customers own system as well as myriad of built-in payment options or payment portals to facilitate faster payments.
Step 3: Tracking Payments
Once the invoice is sent, the tracking of payments is key to maintaining visibility. The technology solution should be able to access information regarding the status of payments, whether they have been received or are expected, in order to take appropriate action.
Step 4: Reconciling Payments
The reconciling of payments ensures that the amounts received are equivalent to the invoice. Technology solutions can automate the reconciliation process, key step in order to ensure accurate audit trails, maintain compliance and identify exceptions that may affect the bottom line.
Step 5: Applying Credits
Linking the order to cash process to the records of the accounts payable department, technology solution can keep track of credits available to customers, whether applied payments or refunds. Ensuring that credits are taken into account is vital for the accuracy of the cycle and the final balance.
Step 6: Automating Accounting
With information regarding payments, credits and reconciliation processes all in one place, the accounting team will be able to access up-to-date knowledge in order to enter the data accurately in the necessary systems. Automating the accounting process will save time and money while increasing the accuracy of the records.
By implementing comprehensive, technology-based solution, the dramatic increase in speed, accuracy and visibility in the order to cash process can be game-changer for any financially driven organization. By streamlining these steps, the cycle of order to cash is simplified, providing C-Suite executives with tactical way to drive success and ensure resources are allocated appropriately.
