How could optimizing the order to cash process benefit your company’s strategy?
Following the digitization of processes across all industries, performance is driven by automation. Withstanding the competitive pressure can only be achieved through gains in efficiency, agility and customer satisfaction.
Optimizing your order to cash cycle is one of the most effective levers to meliorate these indicators and boost your growth and revenue.
Where should you start? This article will guide you through the order to cash process and suggest the best software to begin your own digitization.
What is the order to cash process?
The Order to Cash process, shortened O2C or OTC, refers to all the steps required to process an order placed by a customer. Therefore, it is closely related to the customer lifecycle, as well as the supplier lifecycle (also known as procure to pay).
Order to cash, step by step
In order to understand the order to cash cycle, it is important to consider each of the steps it comprises.
- The customer order: the moment when the customer places an order. The order can be made through any channel (through eCommerce platforms, your website, by phone, at a Point of Sale (PoS)…)
- Order fulfilment: this is the process of integrating the order to your digital (ERP systems, databases...) and administrative systems
- Shipping: this includes the logistics needed to ensure the product is delivered to the customer
- Invoicing: this is the moment you calculate the accounts receivable and send the invoice to your customers
- Payment collection, meaning the moment an order is converted into cash, which you collect from the recipient
The challenges of order to cash
The order to cash process is more than a simple operational cycle. Today more than ever, this cycle can be automated and optimized through digitization, to gain a competitive advantage in areas such as:
- cost-effectiveness: optimizing the O2C cycle means spending less time on administrative procedures, and focusing on value-added tasks instead to reduce costs and increase efficiency
- delay reduction: by reducing cycle times, you can optimize cash flows and boost customer satisfaction
- quality management: the main objective of order to cash optimization is to deliver a positive customer experience, which avoids litigations and enhances customer loyalty
To make this process more efficient, using adapted tools is necessary. The optimization of the order to cash process can only be truly achieved thanks to automation and innovative technologies.
How to optimize the order to cash process
An overview of relevant software
There are different solutions and many tools to optimize the O2C chain. Various types of software can be used to increase the efficiency of your processes. These can be CRMs, ERPs, analytics tools…
Regardless of the solutions you choose to implement, some functionalities should always be considered, including:
- order fulfilment and processing automation
- customer data centralisation
- communication and collaboration tools (instant messaging, task management…)
- analytics tools (dashboards, custom reports…)
- paperwork digitization, to manage documents more efficiently
- invoicing and quote management tools
- integration with other solutions (ERP with CRM for example)
These ensure your company can benefit the most from its digitization.
Benefits of using specialized software
Managing the customer lifecycle requires human intervention every step of the way. Human errors happen, and a mistake can cause rippling effects over the entire chain. Inventory management is especially vulnerable to such errors. Optimizing operational processes with automated solutions limit the risk of errors occurring.
Low-value added tasks optimization
Low-value added tasks such as manual data input are easy to automate. Once freed from these petty chores, your teams can focus on delivering a better customer experience.
This can enhance your loyalty rate and bring real value to your business.
Using tracking systems to have a more accurate understanding of what happens at each step of the O2C process avoids conflicts and confusion. Transparent, timely communication between your teams helps foster trust and this bond is the basis of a good customer relationship.
Data analysis solutions can give valuable insights. Performance tracking and analysis can help you identify and solve problems and bottlenecks along with the order to cash process.
Customer data collection
Collecting and centralizing accurate information about your customers can help you:
- avoid errors and delays during the delivery process, which could damage customer relationships and brand image
- gain a more accurate overview of your business and its customers, so as to define better business strategies
Better customer experience
Delivering a better customer service is perhaps the most important benefit of using technology to digitize the order to cash process.
With the proper tools, you should be able to deliver a frictionless customer experience every step of the way. Seamless exchanges between your business and its customers are essential to long term success. Proper communication ensures orders, as well as litigations, are received and processed smoothly.
The digital transformation of businesses worldwide means that companies must optimize business processes to remain relevant and competitive. Nowadays, businesses should adopt a multichannel approach to reach out to customers.
Using innovation to ensure your company is able to meet the demand created by changing customer habits is the best way to maintain or gain a competitive advantage over your competitors.
Embracing the digitization of business and guiding your teams towards more efficiency can lead to huge benefits.
You can work towards this goal now, one step at a time. Take the time today to train and equip your staff with the best practices related to order to cash, and you will be on your way to success tomorrow.