A company’s success depends on the investment the company does in its processes and their efficiency. There is a saying which goes Your future is created by what you do today, not tomorrow., so investing in your internal processes should start sooner than later. In these terms, Order2Cash (O2C) as a core process is essential for your company’s success. Besides being a core process, O2C is tightly connected to the other company’s processes, such as supply chain, human resources, cash flow, etc. Thus, starting from a customer placing an order to receiving payment and data analysis everything should be interconnected, automated, and digitalized to ensure smooth and efficient enterprise functioning. To better understand the influence that O2C has, in the following blog post we will outline all Order2Cash subprocesses, what they comprise, and how to make them even more efficient.
- Order Management
- Credit Management
- Order Fulfillment
- Order Shipping
- Customer Invoicing
- Account Receivable
- Payment Collections
- Reporting and Data Management
A) Order Management
Order Management happens the moment your customer places an order. It doesn’t matter where it happens, whether on your e-commerce website or via an email, once your customer chooses his/her products, presses buy, and confirms the buying, the order is made. Starting from that point, you are responsible for the order, and its proper management. This means that your order management should take all orders in the same format, process them, and ensure that not even one order is lost.
Fast and error-less order management ensures satisfied customers and increases ROI. How to make it more efficient? First of all, your order management system should be automated and once an order is placed, it should immediately send notifications to all other departments involved in the process. In addition to this, it should also ensure that the order has all the required info to be fulfilled and that the order is in stock. This means that the processes should be interconnected among each other and should allow smooth data transition from one system to another. The financial and inventory departments are crucial here because not having enough information about the product stock (for example) might lead to inaccurate product availability information and dissatisfied customers.
B) Credit Management
Credit Management includes determining whether your customer’s credit request fulfills the requirements for approval or should be denied. And as with the Order Management, it should also be automated against certain credit requirements, and in cases when those requirements are not enough to decide whether to grant the customer credit or not, then the financial department should take over. Furthermore, you need to make sure that the credit management process keeps a history of the previously made purchases, so whenever a returning customer makes a purchase, the process leads him/her directly to the next step, skipping the Credit Management step. This improves customer retention rate as the returning customers do not have to go again through the same process of credit request. In a nutshell, the credit management subprocess should be automated to:
– automatically approve/deny customers credit requests upon previously set requirements,
– keep a history of previously made purchases, and allow returning customers to directly move to the purchase instead of going over the same credit request phase again.
C) Order Fulfillment
Once steps A) and B) are fulfilled, the process continues with Order Fulfillment. Order Fulfillment includes fulfilling the sales order in accordance with customers’ requirements. It is the step that is connected to the inventory management, financial department, and shipping departments, and it includes receiving the product order, analyzing it, preparing it to be delivered to the customer, and sending information to the financial department for invoicing. Being connected to so many processes increases the chances for errors, in cases when these departments are not smoothly connected among themselves. And as mentioned in A), you should have these processes automated and integrated to ensure that the order doesn’t reach Order Fulfillment if the product is out-of-stock.
In addition, orders should be in a standardized template which will increase productivity and efficiency, especially in cases when a new employee comes in, or someone is transferred. By having the order fulfillment step standardized, automated, digitalized, and integrated with the inventory management process and the rest of the O2C process, you will ensure:
– increased employee productivity and efficiency due to automation of manual processes such as checking the inventory management, manually adding orders, etc.
– increased customer retention rate due to having immediate response whether their order will be fulfilled or not.
D) Order Shipping
Order shipping shows the efficiency of your logistics department and its connection with order fulfillment, inventory management department, and finance. The best customer experience is achieved when the time needed for product shipment is optimal. To achieve optimal product shipment time, you need to have data about the product order and payment available to you the moment it happens. Optimization of order shipping can go in two ways: 1) ensuring that your order shipping team has the needed information to deliver the product to your customers at the right time, and 2) optimization of the route to reduce costs and improve operational efficiency.
E) Customer Invoicing
Invoices can hurt your business, especially if they are delayed, inconsistent, or inaccurate. Without a proper time schedule for sending invoices, your finance team will not be able to plan the cash flow and the expenses. To issue a correct invoice, your team should have all the data about the order specifics in detail. If you are doing this activity manually, then you might be faced with incorrect invoices. Automating the process of issuing invoices is one way to avoid double-checking, incorrect, and delayed invoice sending. And sloppy mistakes in invoices sent to customers can result to brand reputation damage.
F) Accounts Receivable
Accounts Receivable reflects the process of checking outstanding invoices. This is the process that takes into consideration the delayed payments and checks why certain invoices are still unpaid, whether it is due to the customer’s side or some mistake in your system. In cases when the error is at your side, your finance team should be able to find the mistake immediately, the reason for it, and repair it immediately. Having this information timely will enable your team to take immediate action and prevent delayed payments.
G) Payment Collections
Once payment is done, your system should immediately note it down and process it in the ordering system. If this process is not automated, and there are information silos, the system might show that certain invoice is not paid. In cases when this information is wrong, and your team contacts the customer, who in fact has paid the invoice, might lead to customer frustration and dissatisfaction. To avoid customers’ frustration, customer loss, and inaccurate finance forecast, the payment collections system should be automated to 1) immediately mark the invoices that are paid, 2) inform the team about paid and delayed invoices, and 3) send a notification to customers with delayed invoices.
H) Reporting and Data Management
If data of each of the steps is gathered and analyzed properly, it can provide valuable information about the issues that might appear, how the systems are performing, and general business performance over time. Furthermore, proper and accurate data management can give you insights into process automation, thus enabling your staff to concentrate on more important tasks rather than manually doing a certain job.
One of the most important things that proper reporting and data management provides is the ability to view the trend of your business over time, whether it progresses or not, and what to fix.
To sum up, Order2Cash (O2C) plays a crucial role in every business, especially in e-commerce. Automating and optimizing it should be an integral part of your business strategy, not just a nice-to-have thing. Our Order2Cash (O2C) solution focuses on:
- reducing errors, optimizing customer service and operating cashflow
- streamlining O2C to increase ROI
- creating consistency within the enterprise ensuring smooth running of processes
- increasing productivity and automating work
- eliminating any errors that might appear.
To achieve all these things, our O2C solution includes:
- automation and digitalization of O2C steps
- integration of O2C with other processes and systems
- O2C improvement on the basis of real-time data
- regular monitoring, evaluation, and improvement of processes.
If you want to see how you can leverage our O2C solution to improve your business, or just want to discuss it, feel free to contact us on the form below.