1. Order Received
The moment a customer places an order (either on an online e-commerce marketplace platform or via a confirmation email) a series of events is set in motion. The first of these is order management.
If your order management system is automated via order-to-cash (O2C) process automation software, instant notifications will trigger a series of actions in other departments of the business that are involved in the O2C process–a level of automation that is almost impossible to achieve with traditional, manual paper-based methods.
In fact, a recent study by IBM* revealed that organizations that adopted best-of-breed O2C tools and systems were 81% more effective at order management than those that had not.
Automation via an O2C software platform ensures that new orders are organized properly, and relevant parties are notified immediately to ensure accurate and timely fulfillment.
2. Order Fulfillment
Order fulfillment is the next step in the order-to-cash process. The most critical aspect of this step is to ensure effective communication of the order to all the responsible departments within the business. This is where digitized O2C processing really shines. Order-to-cash process automation software ensures standardized (and controlled) processes with real-time updates on fulfillment actions. Traditional paper-based methods pale in comparison to AI-driven, digital processing that improves accuracy, and ensures transparency for all while reducing the negative impact of bottlenecks (or eliminating them entirely).
The ability to provide real-time, updated data comes into its own with the shipping side of fulfillment. If data from the previous step, order fulfillment is updated immediately, shipments can be planned effectively to ensure orders get to customers as promised.
Cash flow is the lifeblood of any business and simply put, invoicing is the process that keeps cash flowing into the bank account. The importance of invoicing functioning without delays or errors cannot be overstated. Also, when invoices are sent out on a reliable timetable (or even better, sent electronically), Finance leaders can effectively forecast cash revenues and plan for expenses accordingly.
With this in mind, automated e-Invoicing is the best practice of O2C invoicing and forward-thinking companies understand this and are automating their invoicing processes with e-invoicing software to stay competitive. They are also discovering that the simplest way to send and receive e-invoices is to join a B2B network like Tradeshift. In fact, research compiled by Aberdeen Group revealed that companies that excel at O2C performance require manual input for only 16.2% of invoices—the rest are digitized and automated—compared with nearly 80% for companies that scored in the bottom tier.
4. Receiving Payment
The accounts receivable (AR) team is at the front line of the cash flow battle. However, AR can be simplified and optimized via automation and digitization to make the process more streamlined and effective.
Order-to-cash software automates and reduces several critical pain points of accounts receivable. It can flag invoices at pre-set times automatically before they are overdue. For example, unpaid or overdue invoices can be flagged after a specified time period to trigger an automated payment reminder to the customer.
5. Payment Reconciliation
Payment collections are also a necessary part of receiving payment. But ultimately to be avoided as much as possible. Order to cash process automation software ensures that if payment is delayed past a certain period, then the customer’s account is flagged and order fulfillment paused. If they try to purchase more at this point, the customer will be automatically notified that payment must be made to make further purchases.
Automation also makes it easier for the accounts receivable team to contact customers, outline collection procedures and penalties and also review all overdue accounts and track bad debts.
6. Reporting and Data Management
When it comes to financial reporting and data management, cloud-based AI-driven software excels at the speed and efficiency at which it tracks performance and analyzes data across every step of the order-to-cash process.
Reports are generated almost instantly and automatically, making it easy for executive management to make critical decisions fast and problem-solve any slowdowns to make sure that problems in one area don’t negatively impact other interdependent processes.
Ultimately, business growth happens when executive leaders can easily track how the flow of their O2C process affects everything else in the organization; including customer relationships, length of the cash-to-cash cycle, onboarding, and customer service functions.