Understanding Order To Cash Solutions: Taking Account Receivable To The Next Level
ACCOUNT RECEIVABLE SOLUTION
For executives in the finance department, the process of managing account receivable can be complex and challenging. The challenge of tracking each customer?s transactions and invoices and identifying areas of inefficiency means relying on platform that maximizes effectiveness. Order to cash solutions provide an effective tool, streamlining the process of managing receivables and optimizing the effectiveness of cash flow.
Understanding Order to Cash (OTC) Solutions
Order to cash, in its simplest terms, is the complete cycle of taking an order from customer to collecting payment for that order. This complete cycle is essential for any businesses financial stability, and OTC solutions provide the platform to optimize this process and ensure that receipts are collected on time, closed sales supported and discrepancies addressed.
At the core, OTC solutions provide the technology to automate the processes related to customer orders and the associated receipt of payments. An OTC solution acts as hub where customers, vendors, and internal personnel can access the necessary information and documentation for orders and for payments. This supports greater visibility and control over all financial transactions which, in turn, supports greater revenue recognition and cash flow.
Steps for Using an OTC Solution
An OTC solution provides platform to simplify and streamline the order-to-cash process. Utilizing this platform begins with creating an order. Orders can be entered into the system by customers and/or sales reps and then proceed through the subsequent steps necessary to create recorded sales transaction.
1. Place an Order
Typically, customer or sales rep initiates the OTC process by placing an order. This can be simple document outlining the necessary items and the pricing. This document will be the key to the entire process, providing reference for understanding each step moving forward.
2. Validate the Order
Once the order is made, it ishould be validated against the customer?s credit terms. This involves checking for past-due accounts and any other discrepancies between the customer and the company. This helps ensure that the customer is able to make timely payments.
3. Authorize the Order
Once the customer?s credit is approved, the order should be authorized. This may involve additional approvals from various internal personnel, such as the CFO or accounting personnel. After approvals are made and invoices are issued, the OTC process transitions to the Accounts Receivable portion.
4. Make the Purchase
Once the orders and invoices are approved, orders must be purchased. This is when vendors must be contacted and items must be acquired. With an OTC solution, purchases can be made in bulk, allowing for greater discounts and savings.
5. Create an Invoice
Once the items have been purchased and shipped, invoices should be created. This step is important for providing clear documentation of the final sales transaction. With an OTC solution, invoices can be created in both paper and electronic form.
6. Collect Accounts Receivable
The final step in the OTC process is to collect Accounts Receivable. This is accomplished through the customer providing payment for the associated invoices. This is where an OTC solution can be especially beneficial, providing real-time transparency into payments and customer activity.
Conclusion
Order to cash solutions can provide streamlined platform for effectively managing the entire order-to-cash process. Utilizing an OTC solution supports greater visibility into sales and customers, and can simplify the process of making and managing orders. With this platform in place, companies can optimize their financial operations and maximize their cash flow efficiency.
