What is Order-to-Cash?

Order to cash normally refers to the Enterprise Resource Planning (ERP) process in which taking customer sales (direct from the customer & retail) orders via different sales channels, such as email, internet, sales person, fax or by some other means like EDI, and then fulfilling the order, shipping, logistic and then generating an invoice and collecting payment for that invoice and then receipt.

Order-to-cash performance is at the heart of your business. When orders are improperly fulfilled, shipped, or invoiced, customers will cancel orders or choose to not repeat business. Ineffective processing can cause day-sales-outstanding (DSOs) to worsen and accounts receivables to age. And the more they age, the more difficult they are to collect.

Order-to-cash business processes enable you to improve cash flow and free up working capital to significantly improve your profit/loss ratio and balance sheet and boost shareholder confidence. The multi-step order-to-cash process originates with a customer order and terminates once the customer pays for the goods or services and the company receives cash. Order-to-cash includes order fulfillment, shipping, logistics, invoice generation, payment collection (on a specific invoice), and generation of a receipt to the customer. Seven areas are affected by the order-to-cash cycle:

• Customers
• Order entry
• Customer service
• Distribution
• Operations
• Sales and marketing
• Finance and accounting