Order to Cash. What is it? Which tools can help?

Order to cash (O2C) alludes to the relationship between all parts of a payment process. Basically, the chances of getting paid are maximised if a service is properly agreed, executed and charged. Followed by good credit management i.e. carefully monitoring the payments. And increased further, by higher quality quotes and contracts, before the O2C process has even started. Seamless integration of all these steps is key.

A customer ordering a service or product must be fully immersed in adequate procedures. When focusing on b2b customers, much can be agreed upfront, including product prices and discounts. For this, we need tools to define and maintain products and price lists. Also, functions to create and store contracts, agreements and orders. Auxiliary data too, in the form of customer data from CRM or finance systems. Preferably, disclosed using an automatic data bridge. Then, we (and you) don’t have to worry about sources, syncing and quality. It’s also the case that products, suppliers and prices might sit in other systems. It’s no problem to fetch them in this way.

So, the agreements are in place, governing services, products, prices and discounts. Now we must have a place for transactional data for the delivered services, or the received and supplied goods. This data needs close examination, ensuring that it is correct and complete before it passes through the system.

At this point we are good to go on pricing and billing. Pricing will be carried out within the context of the established contracts and agreed prices and discounts. Rates and tiers play a vital role here. And all should be as “headless” as possible. Next to quality, efficiency is also an area where money can be earned, rather than lost.

The billing process itself must feature tailored workflows. This starts with the generation of draft invoices and ends with approval and posting to the finance system. Ideally, everything is automatic and seamless. Now you’re just one step away from perfection: making it easier for customers to pay, by adding a payment link. Or alternatively, sending the billing data to a payment platform, like Peppol.

For a smooth and seamless operation, which tools do we need?

Firstly, data collection functionality, in the broadest sense. From csv import (better not used) to database links and web services (preferred). The latter in two forms, either providing web services to other systems or using theirs.

Apart from data coming into the O2C system, we need the option of supplying or pushing data into other systems. In other words, we need a DataBridge.

When data is coming in and going out of the system, it doesn’t stay the same. It is enriched, for example, with prices, or transformed into invoices. This handling needs a Rules Engine. Also to steer processes. For instance, holding back data from the next process step, if any information is missing. All this, all in the form algorithms.

Lastly: we need to have smart Billing. This helps us to produce the correct invoices, with exact customer addresses, currency conversions, VAT application, languages and layouts, steering consolidation and appendices. With a transparent and speedy approval stage. With automated posting into the finance system. And with the option to create accruals.

To summarise the three things we need: algorithms, algorithms and algorithms.

Sometimes, companies still have the idea of creating these O2C systems themselves. Bad idea! That time is long gone. Now that you see how many components are needed, how they should interact and the innovations necessary, without breaking the chain. Not to mention the threats that are inherent from the internet, leading to the continuous need for identification of vulnerabilities and their immediate remedy. The conclusion: bespoke systems are dead, long live O2C.

More on standard software versus bespoke systems next time…

ICORP is specialised in algorithm-based technology for Complex Billing®, Credit Management, Efficient Quoting, Time Tracking and Bank Statement Processing. When things get complicated we get excited.