Streamlining the Order to Cash Process through Workflow Automation

order to cash process

Key takeaways

  • The revenue generated by the business and the cash flow is directly impacted by the order-to-cash process. 
  • The order to cash process when handled effectively, mitigates the risk associated with cash flow management. 
  • The order to cash workflow is part of the quote to cash process. 
  • The O2C cycle needs to be standardized to improve consistency in cash flow management. 
  • Technological solutions like workflow automation are helpful in eliminating redundancies and improving transparency and consistency. 

Getting into Details of the Order to Cash Cycle

The order to cash process or the order to cash cycle comprises all the steps/tasks involved in receiving and fulfilling customer requests for goods and services. Successful running of any business requires a steady cash flow. As business grows, the risk in vital business areas like customer acquisition, credit management, cash flow, purchase-to-pay processes also increases proportionately. Optimizing the cash to flow process helps businesses minimize financial risk by pinning revenue generation issues. 

Table of Contents

Importance of the Order to Cash (OTC) Process

The order-to-cash business process needs to be optimized in order to have a positive impact on the business’s bottom line. The OTC process impacts the billing process, accounts receivable function, sales process, and marketing processes. The activities in the o2c process have a direct bearing on the success of the supply chain, inventory, and labor management systems.

Here are how the business processes are impacted by the order-to-cash process:

Accounts receivable: a poor o2c process affects the accounts receivable function by delaying the time invoices are collected. The accounts receivable and invoicing system during the o2c cycle determines the cash flows in the company. Delays in these processes further complicate the payroll, accounts payable, general ledgers, and potential acquisitions.


The reliability of the business processes is directly affected by the consistency and reliability of the o2c process workflow.

Business efficiency:

efficient and quick conversion of the raw material to saleable goods depends on the o2c process. A streamlined order-to-cash business process ensures that less cash is tied up in various inventory stages and releases resources for other processes at the right time.

Business Processes that Impact the OTC Cycle

The OTC cycle is affected by several business processes. The sales orders, invoices, inventory, and logistics functions affect the OTC cycle. Processing sales orders is the first step in the order-to-cash process. If the sales details are not noted properly, the first stage of the o2c cycle itself would start on the wrong note. When wrong product specifications are noted or wrong products are ordered, the sales cause losses for the production unit.

Creating and handling manual invoices delays the payment process and increases the incidence of errors. The workload for the accounting department also increases when invoices are processed manually. Another factor that affects the OTC cycle is the logistics function. Last-minute delivery requests, unexpected transportation changes, or damages to cargo are some of the logistics disruptions that can throw the o2c process out of gear.

The credit policies of the company also impact the OTC cycle. Selling goods or services on credit, and lack of liquid cash or cash inflow are some of the credit policies that may impact the OTC process. Dissatisfied customers often refuse to make payments on time. Such defaulted payments affect OTC collections and customer service departments.

Steps in the Order to Cash (OTC) Cycle

The meaning of o2c process is a set of business processes that manage everything that is time-related to sales, marketing, or branding functions. In most large ERP systems, like SAP and Oracle, the order to cash process map is dotted with 8 steps. The OTC cycle steps are listed below:

Order management:

the first step in the o2c process is triggered when an order is placed. The sales order to cash process begins once the purchase is confirmed at the customer’s end. The order could be placed in multiple ways, it could be a direct online order from the customer on the website, or through the sales team over email or telephone order. Order management may be done through eCommerce platforms, email to the sales department, notifying sales reps in person, or manual order entry.

Credit management:

the credit management process is known to be the front-facing step of the OTC process. For orders where credit is applicable, the customers who placed the order for the first time should be directed to the credit approval process. The credit management system must be able to choose eligible customers for approved credit.

Order fulfillment:

at this stage, the order is prepared to be shipped to the customer. In case of a service order, an appointment for service is scheduled at this stage. In case of physical goods are to be delivered, the inventory personnel must be informed of the details of the order to proceed with fulfillment and shipping. For delivery of services, access is granted for the service ordered.

Order shipping:

for successful shipping of the order logistics and shipping arrangements come into play. Well-regulated logistics ensure that products/services are delivered on time without any compromise on performance standards. The design department needs to be informed about the shipping details. The audit must be done at this stage of the order to cash audit program.

Customer invoicing:

The next step in the o2c cycle is customer invoicing. The customer receives an invoice with complete details of the order along with discount and tax information.

Accounts receivable:

Upon receiving the invoice, the customer clears the payment. Ideally, the customer should be presented with multiple payment options like electronic fund transfer, debit, or credit card payments. The OTC cycle in accounts receivable must be reviewed for outstanding dues or discrepancies in payments. In case of discrepancies, the revised invoice needs to be shared with the customer.

Payment collections:

the received payments must be recorded against designated timelines. All past-due accounts must be regularly reviewed to avoid lapses and cash deficits.

Reporting and data management:

The orders to cash (o2c) process is complete once the payment is logged into the accounting books as accounts receivable against the raised order. OTC journal entries need to be recorded for the audit trail.

The stability of the order to cash modules and seamless coordination between them is instrumental in ensuring stable operations of several business functions. Some of the business workflows that are dependent on the OTC process are:

  • Onboarding and training
  • Vendor and customer relationships
  • Customer service functions
  • Length of the sales cycle
  • Forecasting and cash flow

Challenges in Order to Cash( OTC) Management

While the steps in the order to cash cycle flow chart may seem pretty straightforward, there are several moving parts involved in it. Failure in any one of the steps has a cascading effect on other business functions. Some of the common challenges in the OTC process:

  • Inaccurate sales orders due to manual entries
  • Inaccurate invoice entries in manual processes
  • Dissatisfied customers that default on payments
  • Delayed payment collection
  • Security of data

Issues such as inaccurate orders need to be reworked and resent to the customer. Manual processing methods also increase the scope for inaccurate entries. Delayed collections lead to complications and bottlenecks in other business processes like accounts payable, payroll, and mergers and acquisitions. Other indirect effects of bottlenecks in the OTC process workflow are diminishing the customer experience.

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Best Practices in Order to Cash (OTC) Process

As mentioned in the above sections, the OTC process has a direct bearing on the success of the business. Optimizing the order-to-cash cycle workflow can yield remarkable benefits that ripple throughout the business. The o2c process affects the supply chain, labor, and inventory management. Bottlenecks in any one of the steps in the OTC cycle can bring separate business systems to a standstill. Here are some of the best practices that can streamline and optimize the order-to-cash workflow.

Standardizing o2c cycle:

Irrespective of the size and scope of the business standardization of the o2c procedures throughout the organization helps increase consistency and productivity. Standardization also helps reduce the order-to-cash cycle time significantly. Cutting down the cycle time translates to increased and predictable cash inflow.

Using technology for optimization:

Using technological solutions like workflow automation optimizes and streamlines the OTC cycle. Repetitive and redundant processes are removed, and consistency and transparency of the process are increased through automation.

Integrating disparate systems:

Large organizations, especially those that have grown with the acquisition, have dozens of disparate systems. Integrating these systems creates an efficiency that can shorten the cash cycle automatically. System integration also enables a seamless exchange of data between them and minimizes human bias and error.

Monitoring and evaluation of cash systems:

In order to cash systems, need to be periodically reviewed and monitored. Key performance metrics throw light on the efficiency of the o2c process.

Training staff:

All the stakeholders in the o2c cycle need to be aware of their roles. Staff working on o2c systems need to be trained to handle exceptions, downtime, and other issues, and resolve them immediately.

Implementing these best practices ensures that the order-to-cash process helps save money and time for the business.

Automating the Order to Cash (O2C) Cycle

Using digital solutions like digital invoicing and workflow automation helps improve the productivity and efficiency of the o2c process workflow. Manual business processes are ridden with inaccuracies, inconsistencies, human bias and error, and bottlenecks. Various steps in the order to cash process workflow like order management, invoice generation, approval, accounts receivable, and data reporting, can be effectively automated.

Cflow from Cavintek is a cloud workflow automation solution that automates key business functions within minutes. The visual form builder in Cflow empowers the user with an easy drag-and-drop option to build custom workflows. This is no-code automation software that can be used by people without any technical background.

Automation of the order-to-cash process can be done effectively with the o2c cycle flow chart that maps the process clearly. The mapping of the o2c process workflow helps identify the redundancies and bottlenecks that can be effectively resolved through workflow automation.


A significant part of the operating costs of a business is spent on order to cash management. Optimizing the order-to-cash process helps improve the performance of other business processes that are linked to the OTC cycle. Workflow automation helps streamline and optimize the order-to-cash process flow by eliminating the drawbacks of manual processes. Cloud workflow automation solutions like Cflow automate important business workflows like procurement, procure to pay, order to cash, invoice approvals, and purchase order processing. Progressive businesses looking to improve the efficiency and productivity of business operations are choosing workflow automation solutions for key business processes. If you would like to explore interesting automation possibilities with Cflow, sign up for the free trial today.

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