Understanding the Order-to-Cash (O2C) Process: How Your ERP Can Streamline Cash Flow

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First Things First: What is the Order-to-Cash Process?

Whether it’s slow and manual or streamlined and automated, the order-to-cash (O2C) process is essential to the functioning of any business.

O2C describes the cycle of taking orders and turning them into revenue for your organization: from order management, to billing and payment processes, and to product fulfillment. For most organizations today, this is a highly manual and error-prone process.

Let’s visualize what the steps in this process look like:

Source: Salesforce

Now that we know what the order-to-cash process is, let’s understand how it works, and what businesses are doing to streamline it today.

How Are Businesses Managing Their O2C Processes?

According to data from Aberdeen, only 20% of organizations have an automated and standardized order-to-cash system in place.

The remaining 80% —those who still carry out O2C via manual processes— are risking making data entry errors, wasting resources that can be allocated elsewhere, sacrificing efficiency, and facing higher operational costs.

Still not convinced you need to be among the 20% of forward-thinking organizations? Think again. The benefits of automation also include: more sales, higher margins, and more satisfied customers.

Let’s dive deeper to understand the case for why businesses need a streamlined O2C process:

Why Automate (and Expedite) Your Order-to-Cash Process?

First and foremost, let’s talk numbers.

Nothing speaks louder than tangible data that can prove the value of tackling a new business challenge. When it comes to O2C, automation and streamlining processes has a massive impact on efficiency and profitability.

In fact, according to an IBM study, companies that have adopted best practices to streamline the order-to-cash process are —as a result— 81% more effective at order management.

By automating, you can also eliminate the common challenges that come with a manual O2C process, including:

  • Double entry or incorrect entry of orders
  • Slight (or even extensive) delays between order placement and shipping
  • Delivery of orders that don’t match invoices
  • Poor inventory information (that may cause sales representatives take backorders even when the products are in stock).


Beyond all these benefits, you can also, quite simply, eliminate slow cash flow. Plus, your Dynamics ERP can play a crucial role in doing so more easily. Included in Aberdeen’s study was the success story of one survey respondent who did just that.

Here’s what they had to say:

“By re-engineering our processes and modeling them in our ERP system we were able to reduce [outstanding accounts receivable] (DSO) by 40%. As our sales grew 30%, we were able to grow margins an additional 20% through reduced inventory of slow-moving items. We also reduced late deliveries.”

So, What’s the Challenge in Automating O2C Processes?

If automating the O2C process were simple and challenge-free, every business would be doing it. So, what are the common challenges that need addressing?

1: It's Time-Consuming

The reality is that fully integrating and automating your ordering, fulfillment, and billing and payment systems may take a pretty significant amount time. You not only have to dedicate time to the project, but also allocate resources with the expertise to build out and execute upon an expedited O2C process. But, once done and if done right, it can take days or weeks off the overall length of your O2C cycle.

 2: Data is a Problem

Today, only 10% of businesses use automated assessment and cleansing of their master data as part of their O2C improvement processes (Salesforce). This may not seem like a massive issue on its own, but when coupled with the fact that poor data quality accounts for 20% of business process costs, it then becomes clear that data is posing a big challenge for organizations when it comes to O2C, and they aren’t doing enough to address it.

Data from our 2019 B2B Buyer Report (conducted by Sapio Research) offers even more insight into just how costly this can be:

  • In the U.S., manual order entry causes errors daily (for 7% of B2B organizations), and weekly or monthly for 33% of businesses.
  • For 68% of B2B businesses, order entry errors decrease profitability by up to 25%.
  • 74% of B2B organizations find that order entry errors make their processes up to 25% less efficient.

Many of these struggles can be mitigated by leveraging real-time integration with your ERP data. Here’s more on how you can implement a better O2C process:

What Can You Do to Automate Your Order-to-Cash Process More Easily?

Like any business process automation project, tackling a new-and-improved O2C process has to come with a plan of attack, and the resources and budget to execute. Fortunately, Sana Commerce makes this simple with our latest product: Sana Commerce Customer Portal.

With Sana Commerce’s Customer Portal, the complete O2C cycle is supported and enhanced by accurate, real-time Microsoft Dynamics or SAP ERP data: allowing you to offer your business and your customers an unparalleled level of control over account management, customer invoicing, quote and order management, RMA, and more.

Learn more from our website about how Sana can help streamline your order-to-cash process by leveraging the power of your ERP.

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