Improving order-to-cash business process


Several organizations believe that order to cash cycle could be improved or made more efficient by getting the receivables quickly from the customer as that is probably the only dependent variable. However, apart from this, there are several other factors impacting the efficiency of the order to cash cycle like

  • Ability to manage huge volume orders – Whether the manufacturing facility has the proper resources to manage huge orders
  • Order turn-around time – How quickly, after receiving the order, the goods could be made ready for dispatch
  • Uncertainty in credit levels of the customers – Whether the customer has a good credit history to be able to pay on time or there might be a possible risk of default

Therefore, a thorough analysis on the aforementioned factors is necessary prior to engaging into an order to cash cycle to take control of the whole cycle and increase its efficiency. This could be achieved using the following

  • Proper procurement and production planning

Once the orders are received, it becomes imperative to plan the procurement and production of the final product provided it is not already available in the inventory. This would help an organization estimate a possible delivery date, taking into consideration the procurement and production lead time, to ensure quick turn-around time and on time delivery.

  • Accurate billing and documentation

Accurate invoicing and documentation would eliminate any scope of misunderstanding between an organization and its customers thereby reducing rework and possible delays.

  • Customer’s Financial Analysis

Analyzing customer’s financial situation, prior to entering into a sales contract, would give organizations an idea whether the customer would be able to manage the payments thereby helping them decide whether or not to go ahead with the transaction.

  • Devise collection strategy based on customer situation

If customer’s financial situation is not good and an organization still decides to go ahead with the transaction, knowledge of customer’s financial situation would allow it to modify its collection strategies accordingly to give customers a flexible payment option and also opt for insurance coverage to manage any risk of default.

  • Benefits and offers for on or before time payment

Offering benefits and perks to customers in return for quick payments would ensure receivables on or before time resulting in increased efficiency and quicker completion of order-to cash cycle. Furthermore, the benefits would ensure customer’s loyalty and lead to a long term relationship thus ensuring a constant flow of revenue.

An improved order to cash cycle would not only help organizations efficiently manage their orders and collections from customers resulting in a constant cash flow but also give them the bandwidth to focus on new market strategies and ensure further expansion.

TCS iON solution has a fully Integrated Order to Cash cycle starting from enquiry to sales order to receipt voucher against sales which facilitates end to end monitoring of the entire cycle. The solution also enables organizations to enter into sales contracts, track sales orders and pending shipments, monitor sales returns, design sales forecasts and monitor sales targets assigned to the sales force. In addition, TCS iON offers the facility of direct shipment which would bypass sales order creation and directly ship the goods without a sales order reference thereby shortening the overall order to cash cycle.

About the Author:

Swayandeep Das has been associated with TCS for more than 6 years now. He worked as a business analyst having proven expertise belonging to multiple industries which include trading, process manufacturing, plastic molding, import, and export. Currently he is the Pre-sales lead for TCS iON International team.

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