Order to Cash (O2C)
- The definition of Order to Cash:
- Order to Cash steps:
- Order to Cash optimization:
The definition of Order to Cash:
L’Order to Cash (O2C) is a process that covers the entire customer cyclefrom the order of a product or a service to the collection of the invoice.
The objective of theOrder to Cash is to optimize :
- The sales process,
- To maximize revenues,
- To reduce possible errors,
- Minimize late payments,
Order to Cash steps:
The process may include several steps:
- Receipt of order: it is usually placed using a payment form by the customer. The objective is to track the statistics of the page.
- Product availability: it is important to check that the requested products are in stock and available for delivery. The objective is to avoid as much as possible customer dissatisfaction due to a delayed supply.
- Delivery Preparation: once the product is purchased, the product must be sent to the sender. It is necessary to anticipate its delivery and to find the best process to save time.
- Delivery of the order: the order is sent to the customer via a carrier or an internal delivery service. The goal of the operation is to benefit from the best possible distribution network.
- Billing: the order has been delivered, or the service has been provided, an invoice is generated and sent to the customer. The objective is to think of a fast and automated way to send the invoice.
- Payment tracking: the client company must honor its invoice by the due date. It is important to follow up on payments by reminding your customers. This allows you to anticipate a collection procedure and to manage customer risk.
This process varies from one company to another depending on the specificities and internal processes. A service company will have a Order to Cash different from that of a product company.
However, the billing and payment tracking remain a priority for these two types of companies.
Order to Cash optimization:
Optimize theOrder to Cashis to improve the sales process. But it’s also about maximizing the company’s revenue. This optimization requires a few key actions:
- Digitalization. It is the key to automate certain tasks, such as automatic sending of invoices, customer reminders, and real-time inventory control. Automation saves considerable time and reduces the number of errors.
- Customer risk prevention. This is the starting point for all
good customer relations
. Properly executed prevention avoids many unpleasant surprises. Is the cash flow of the company, with which you have a commercial agreement, healthy? Does the payer profile inspire confidence?
- Payment and collection. This is the last phase of the O2C. It often concentrates all the problems of companies ( credit management). Because this phase is not about you, but about your customer.
By using a collection software:
- You accelerate the digitalization of your company and follow all operations with a customer dashboard.
- You can anticipate potential customer risks thanks to a complete history of your business relationships.
- You automate the collection of your invoices with a payment link.
The optimization of your O2C requires the use of Aston iTF.