The order-to-cash process (abbreviated as O2C or OTC) is a vital part of any business operation. Yet it is often overlooked and underfunded, despite being a clear opportunity to increase efficiency, improve cashflow, and strengthen customer relationships. It is crucial for companies to identify opportunities, reduce costs within the O2C process, and recognise the benefits of investing in smart solutions.
What is order to cash?
The order-to-cash process covers the entire journey from receiving an order to payment of the invoice. It involves every stage of production and delivery. The aim is to optimise this process so that each stage runs smoothly. Doing so requires time, money, and resources — and many entrepreneurs lack one of these. Sooner or later, however, getting the order-to-cash process right becomes a prerequisite for sustainable growth.
If an organisation does not have this under control, the first signs often appear in its cashflow. But it can also result in dissatisfied customers if the production and delivery processes are poorly organised. In short: the O2C process can make or break your company, with results that directly influence customer satisfaction, liquidity, and even employee morale.
Order-to-cash process steps
The specific steps vary by organisation, depending on the market, product, or service. For instance, a car manufacturer has a very different O2C process than a consultancy. The main point is that each organisation must identify its own focus areas.
In general, the order-to-cash process follows these steps:
- Booking the order
- Allocating resources, time, and money (supported by a planning system)
- Production or service delivery
- Delivery of the product or service
- Invoicing (usually immediately after delivery)
- Aftercare and quality control
It is important to note that the O2C process is interconnected with the rest of the business. For example, poor HR policies leading to high absenteeism can delay production, which in turn disrupts the order-to-cash flow.
Optimizing the order-to-cash process
The purpose of O2C is simple: deliver goods or services to customers in exchange for payment. But because it consists of two key sides — order management and accounts receivable management — efficiency depends on how well these are aligned. Unfortunately, many teams work in silos, which hinders smooth processes.
While improvements are possible at every stage of O2C, Payt specialises in the accounts receivable process — also known as invoice-to-cash. Too many organisations assume the job is done once the invoice is sent. In reality, that is only the beginning.
Research shows that around 30% of bankruptcies are caused not by poor business models, but by liquidity problems. Managing invoicing and collections effectively is therefore essential. The invoicing stage is also a valuable moment to check product or service quality, as customers often provide feedback during this phase.
Using software to improve your O2C process
Order-to-cash software can transform business performance. It helps companies organise processes systematically and prevents errors once configured. Comprehensive ERP systems can automate large parts of the business process, ensuring resources are available and delivery deadlines are met.
However, most ERP or financial packages lack robust solutions for collections and debtor management. That is where Payt makes the difference. Our platform integrates seamlessly with your existing financial package and immediately delivers value by automating reminders, follow-ups, and debtor communications.
Are you interested in more information about how Payt works and our solutions for your challenges in accounts receivable management? Please contact us, we are happy to help you with our comprehensive software solutions.
