Understanding The Order To Cash Best Practices Using An Order To Cash Software


In the finance department, an executive will often be tasked with overseeing the whole order to cash process. Doing so requires an in depth understanding of the best practice employed. This applies to both the order to cash manual processes, as well as recognizing and utilizing the advantages of an order to cash software solution for optimal performance.

Traditionally, the order to cash process institutes some manual operations, such as manually creating orders, fulfilling orders, and billing customers. As you can imagine, considering the volume of operations that may be running through single instance of an order to cash process, manual operations are often slow and inefficient, leading to major delays or even disruptions of the whole order to cash process.

In order to address this impairment upon business operations, executive finance leaders are turning to the use of an Order to Cash software solution. This tried and tested solution delivers automation, accuracy, and convenience to the overall order to cash process, enabling greater efficiency and allowing for far more effective financial management. However, it is important to first develop conceptual understanding of the Order to Cash best practices for utilizing the Order to Cash software in order to maximize on its full potential.

Step 1: Customer Setup

The first step to running an efficient order to cash process is to correctly set up your customers. This is not only important for accuracy and precision, but also helps you get clear overview of all customer information, including payment terms, discount information, customer contact, etc. This ensures that when invoices and orders are being sent, this is done in an accurate fashion.

Step 2: Sales Order Generation

The second step in the order to cash process is sales order generation. This involves efficiently creating the sale order on the Order to Cash software. The Order to Cash software can be fed customer input automatically or manually. This will then generate the orders accurately, along with all applicable tax parameters and payment terms as dictated by customer conditions. This helps to ensure greater accuracy right from the start of order generation.

Step 3: Transfer Orders to Fulfillment Process

Once the sales orders have been generated, they can then be transferred to the fulfillment process. This is vital step in ensuring that orders are accurately fulfilled and shipped in timely manner. This can be done in variety of ways, from manually from the Order to Cash software, or through direct interface with other in-house fulfillment systems.

Step 4: Invoicing

The fourth step in the order to cash process is invoicing. This is achieved by automatically generating the invoice using inputs provided by the Order to Cash software. These invoices must include all necessary information, such as payment terms, customer information, and taxes. The invoices should be then sent out to customers in an accurate, timely fashion.

Step 5: Cash Receipt

The fifth step in the order to cash process is receiving cash receipt. This is done by processing and monitoring incoming payments from all customers, both in terms of the currency, as well as the form which payments are received in (credit, debit, etc.). This is crucial step for monitoring the financial performance of the order to cash process.

Step 6: Cash Application

The sixth step in the order to cash process is to accurately apply cash receipts to invoices. This helps to ensure accurate and timely payments from customers. The process can be automated with Order to Cash software, helping to greatly reduce manual work, as well as errors.

Step 7: Accounting Reporting

The last step in the order to cash process is to generate accounting reports. This involves creating reports detailing the overall performance of the order to cash process. This allows for the executive to gain further insight into the payment performance of customers, as well as any discrepancies within the process.

These seven steps are the Order to Cash best practice when using Order to Cash software, helping to ensure that orders are created, fulfilled and invoiced accurately and in timely manner. Following these steps allows executive finance leaders to ensure the smooth running of the order to cash process, both manual and automated. By following these steps, executive finance leaders can take advantage of the power and accuracy of an Order to Cash software solution to maximize their overall financial performance.