Virginie Taborowski
Content Specialist
Last updated on
1.10.24
Best Practice
Automate and digitize the order-to-cash process — this is how it works
6
min
Table of contents
The order to cash process forms the backbone of every company that sells goods or services. It comprises all steps from order entry to delivery to payment entry.
But in an increasingly digital world, where efficiency and accuracy can make the difference between success and failure, it is becoming increasingly important to automate the order to cash process. By digitizing the order to cash process, companies can not only minimize errors, but also significantly increase speed and customer satisfaction. In this article, we take a look at how this automation and digitization can be implemented to optimize the entire workflow.
What the digital sales process looks like
The Order-to-cash process, often as O2C abbreviated, means the entire process from ordering a product or service by a customer to successful confirmation of receipt of payment. This process comprises several phases that work seamlessly together to ensure a smooth business flow. The main stages of the order-to-cash process are:
- Pre-sales
- settlement
- shipping and
- invoicing
- Payment reconciliation
By seamlessly integrating data and processes, the digital order-to-cash process enables efficient processing, reduces errors and supports customer loyalty. Companies can thus better manage their processes, reduce costs and strengthen their competitiveness. At the same time, customers benefit from a smooth and convenient shopping experience, which in the long term leads to stronger customer loyalty and positive brand perception.
Pre Sales
In this phase, the O2C process begins with the initiation of sales. Customer orders are accepted, offers prepared, contract terms negotiated. The quality of this phase significantly influences the further course of the process.
Settlement
As soon as an order confirmation or order has been received, processing begins. This includes checking the availability of the ordered products (inventory) or services, coordinating shipping and preparing the invoice. Processing a small range of products does not require much effort, but as soon as it involves a comprehensive or complex range of products, hardly any company can do without powerful CRM and ERP systems.
Shipping
In this phase, the ordered products are delivered or the agreed services are provided. The correct and timely delivery of shipments is crucial for customer satisfaction and loyalty.
Invoicing
After the delivery or provision of the service has been completed, the invoice must be issued. All relevant data must be compiled precisely to avoid errors or delays in the payment process.
Payment reconciliation
After sending the invoice, it is important to closely monitor incoming payments and reconcile them with outstanding invoices. The bank connection to the ERP system is important for optimal payment reconciliation.
Efficient payment reconciliation enables companies to identify payment delays at an early stage and take appropriate measures to minimize potential payment defaults. Tools are needed that automatically recognize a missing payment receipt and therefore send the reminder — without additional effort for sales staff. Smooth payment reconciliation not only improves internal financial management, but also strengthens business relationships and the company's reputation, while customers enjoy a positive experience with prompt payment confirmation.
This is how you can automate and digitize the order-to-cash process
Handling the order-to-cash process manually can be time-consuming and leave room for errors. Automating the process, on the other hand, creates numerous benefits for companies. By automating repetitive tasks, employees can focus their time on value-adding activities and avoid bottlenecks in the process. In addition, automation results in higher accuracy and reduces the risk of errors when entering data or invoicing.
Modern enterprise resource planning systems offer solutions for partially automating the order-to-cash process. Only the integration of customer database, sales management, warehouse management, financial and accounting data in a central system can the entire process be made transparent and efficient. The connection of CRM, ERP and other systems enables a continuous digitization of processes.
Automation also makes it possible to set up notifications and escalation mechanisms to identify and correct delays or irregularities in the process at an early stage. For example, if a customer does not pay an invoice, automated payment reconciliation ensures that reminders are sent directly thanks to a bank connection.
A process essential for survival
Efficient execution of this process leads to improved liquidity management and accelerated cash flow — making the order-to-cash process business-critical. As a result, companies can better plan their operating costs, make investments and ensure financial stability. In addition, the order-to-cash process enables seamless communication and collaboration between the various departments of a company, which leads to increased efficiency and productivity.
From a customer's point of view, the well-functioning order-to-cash process also offers significant benefits. Customers experience seamless processing of their orders, fast deliveries and transparent payment processes. This results in a positive customer experience, increased satisfaction and stronger customer loyalty. Customers appreciate the reliability of companies that make the order-to-cash process efficient and professional. This increases the opportunity for repeat purchases and recommendations many times over.
Faster cash flow through automation
One of the most significant effects of automating the order-to-cash process is expedited processing and the associated faster availability of incoming payments. By using an ERP system that automates the entire process, invoices can be created promptly and sent to customers. By connecting the bank to the ERP system, payment reconciliation can also be automated. This results in a reduction in payment time and therefore an improved cash flow for the company.
In addition, automation enables the introduction of electronic invoicing and payment mechanisms, which further speeds up the entire payment process. Customers can view invoices online and make payments directly via various digital payment methods. This not only leads to faster processing, but also to improved customer relationships and customer satisfaction.
