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Ordine in contanti

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The order to cash (O2C) process refers to the series of steps a business takes to fulfill customer orders and collect payment. Key steps include order confirmation, credit checks, shipment and delivery, invoicing, collections, and payment receipt.

Let’s dive into these steps in a bit more detail.

Stages of the Order to Cash (O2C) Process

First off, let’s break down the eight main stages of the O2C process:

1. Customer Places an Order

The initial stage of the O2C process, order management, involves receiving and processing customer orders.

This phase sets the tone for the customer's experience and subsequent order to cash stages, so it’s essential to get it right.

Effective order management requires a system that accurately captures order details, including product specifications, quantities, and delivery requirements.

It also involves verifying the availability of products and ensuring that the sales order information is communicated clearly to the fulfillment team.

2. Order Is Approved

The next stage–order approval–is where credit checks (if required) come into play. You need to ensure customers can pay for your products before you subject your company to the expense of order fulfillment.

Effective credit management is essential for maintaining healthy cash flow and avoiding bad debts. Depending on your accounting process, orders may be reflected as revenue at this stage.

3. Order is Fulfilled and Shipped

Once an order is confirmed and credit is approved, the next step is order fulfillment.

This stage ensures that the products ordered are in stock and ready to leave the warehouse. It might include assembling or manufacturing products, as well as picking, packing, and shipping them.

Efficient order fulfillment is crucial to meet delivery deadlines and maintain customer satisfaction. It requires close coordination between sales, production, and logistics teams.

4. Invoice is Created and Sent

As we all know, invoicing is the process of billing customers for the products or services provided.

Invoicing doesn’t always happen after order fulfillment; it varies based on the business model, industry norms, and specific customer agreements. It can occur pre-delivery, after stages of a product are completed, or on a recurring basis.

5. Payment Is Collected and Reconciled

This is the accounts receivable and payment collection stage, where the focus shifts to managing and tracking incoming payments against the issued invoices. It includes monitoring payment due dates, sending reminders, and reconciling received payments with their respective invoices.

Needless to say, effective management of accounts receivable and payment collection are essential for maintaining a healthy cash flow. Errors made at this stage can have disastrous consequences. Effective customer communication can help avoid misunderstandings.

6. Data Management and Reporting: Analyzing and Reporting on the O2C Process for Improvements

The final stage involves managing the data generated throughout the O2C process and using it for reporting and analysis. This step unlocks insights into the efficiency and effectiveness of the order to cash cycle.

Process mining, a technique where algorithms are applied to data logs to discover, monitor, and improve real-world processes, is often used in this step to analyze and optimize elements of the O2C cycle.

O2C business process analysis includes tracking key performance indicators (KPIs) and identifying bottlenecks across every O2C stage, from order management to ensuring receivables are tracked according to company credit policy.

Challenges in the Order to Cash Process

When it runs smoothly, the order to cash process facilitates the efficient conversion of a customer order to cash payment, ensuring goods are delivered timely and accurately as per customer agreement.

The problem is, for many companies, especially in B2B, where sales cycles are long and complex, the process is anything but smooth. This can lead to customer dissatisfaction and delayed cash collection.

As businesses conduct sales across multiple channels, from online to in-person, managing O2C becomes even more complex.

Here are some of the most common order to cash challenges B2B companies of all sizes face:

Inefficiencies and Errors in Manual Processes

O2C requires seamless collaboration and communication within your organization (across departments) and externally with customers, transportation providers, financial institutions, and other partners.

However, each handoff presents an opportunity for mistakes as information passes from one party to another. Manual processes compound this issue, introducing opportunities for delays, misunderstandings, and errors that risk derailing the order to cash process.

Here’s what to watch out for if you’re still processing transactions manually:

  1. Error-Prone Transactions: Manual processes are susceptible to human error, which occurs at an average rate of 1% for each 100 data points entered. Consider how this might scale up across every stage of a manually operated order to cash process.
  2. Slower Processing Times: Manual handling of orders and invoices is slow, delaying order fulfillment and payment collection. Inefficient processes cost employees up to a third of their time at work, resulting in lower productivity.
  3. Higher Operational Costs: The labor-intensive nature of manual processes increases operational costs. It requires more staff time to manage, track, and correct orders and payments.
  4. Limited Scalability: As business volumes grow, manual processes can become a bottleneck, limiting your company’s ability to scale effectively. The more complex your products are, the worse this issue becomes, and the more you’ll benefit from automated, integrated systems.

Data Management and Integration Issues

Data is central to O2C, supplying team members and departments with the information they need to fulfill orders, send invoices, and collect payments.

Beyond fulfilling the order itself, businesses need to put that data to use to refine future processes and enhance customer satisfaction.

The reality is that in most companies, people are unable to access the right data at the right time. Research shows that 78% of executives struggle with utilizing their data for decision-making, underscoring the gap between having and effectively leveraging data.

Here’s why companies often struggle to leverage data effectively:

  1. Data Silos: Data stored in disparate systems can create silos, making it difficult to have a unified view of the O2C process. This fragmentation can lead to inconsistencies and communication gaps.
  2. Integration Challenges: Integrating data across different stages of the O2C process, from order management systems to accounting software, can be complex and costly.
  3. Inaccessible Data: Lack of real-time data access can delay decision-making and response times, impacting customer satisfaction and operational efficiency.
  4. Difficulties Obtaining Insights: Without proper data integration, analyzing the overall performance of the O2C process is challenging, hindering the ability to identify areas for improvement.

Managing Multiple Sales Channels

Expanding into new sales channels allows businesses to reach more customers. But it also introduces operational complexities. Order to cash processes often vary widely between channels–for example, in-person transactions function differently than e-commerce.

This complexity manifests in a few key areas:

  1. Customer Preferences: Customers increasingly expect omnichannel accessibility–the ability to transact when, where, and how they prefer. While it’s crucial to meet these demands in a competitive landscape, supporting multiple purchase and payment channels strains operations and resources. Inconsistent data and disjointed processes further complicate matters.
  2. Payment Terms: Providing flexible payment options across multiple sales channels presents challenges for financial management. While generous payment terms may be feasible for established in-person customers who pose less risk, it can be difficult to scale the same terms profitably to online sales channels.
  3. Widened Demographics: Reaching new customer demographics can mean accommodating multiple currencies, languages, and regional preferences. While widening the buyer base, localized differences further obscure uniform processes.

Rising Demand for Customizable Products

The demand for configurable products is transforming B2B sales, with 20% of customers willing to pay more for customized or personalized goods.

Suppliers see strong returns from offering personalized products, but the more product options there are to choose from, the more convoluted the O2C process becomes.

Selling customizable products adds layers of complexity to the order to cash process:

  1. Pricing Complexity: With so many product configurations available, calculating accurate pricing and quotes for each custom order becomes incredibly complicated without automated systems in place. Even small mistakes can lead to lost orders.
  2. Order Capture Challenges: Capturing custom orders requires collecting all the exact component options, materials, and specifications chosen by the customer. Manually capturing these complex orders leaves ample opportunity for missing or incorrect details.
  3. Fulfillment Difficulties: Producing a high volume of unique customized orders strains manufacturing and logistics operations. Without accurate order specifics, businesses struggle to fulfill orders correctly, resulting in delays and expedited shipping costs.

Compliance and Security Concerns

Passing sensitive order data from person to person and system to system demands rigorous security. Failure to protect that data could result in non-compliance with privacy regulations or even risk a data leak or breach.

Data privacy is a significant barrier to order processing and fulfillment. 18% of leaders consider the cost and complexity of data privacy their primary concern due to potential revenue loss and customer trust risks.

  1. Data Security: Safeguarding sensitive customer and financial data is paramount. It requires implementing rigorous security measures and continuously updating them to defend against emerging cyber threats.
  2. Conformità normativa: Companies need to comply with various local and international regulations regarding data privacy (like CCPA or GDPR), financial reporting, and industry-specific standards.
  3. Audit Trails: Maintaining transparent and accurate records for auditing purposes is essential. This requires reliable systems to track and document each step of the O2C process.
  4. Communication: Communicating customer details between personnel and teams without compromising security is a significant challenge.

How to Streamline the Order to Cash Process with CPQ Software

Configura, Prezzo, Preventivo (CPQ) systems are specialized tools used in sales to provide accurate pricing for complex and customizable products.

The essence of CPQ lies in its ability to streamline the sales process by:

  1. Configurazione: Assisting in selecting suitable product options and features based on customer requirements. This step ensures that the product configurations are valid and feasible.
  2. Prezzi: Automatically calculating the price for the configured product, considering various factors like customization, quantities, discounts, and specific customer agreements.
  3. citando: Generating detailed and accurate sales quotes that can be presented to the customer. This includes all the necessary information, such as product descriptions, pricing, delivery schedules, and terms and conditions.

CPQ systems simplify complex sales processes, reducing the time and effort required to generate quotes and minimizing errors associated with manual order to cash processes.

Features of CPQ Systems

CPQ systems like Epicor CPQ come equipped with a range of features designed to optimize the order to cash process:

  1. Visualizzazione del prodotto: Offering 2D, 3D, augmented, and virtual reality visualizations to help customers and sales reps understand the final product configuration.
  2. Prezzi dinamici: Adjusting prices in real time based on fluctuating variables like raw material costs and competitor activity.
  3. Customizable Quoting Templates: Providing flexible templates for creating professional and branded sales quotes.
  4. Workflow Management: Streamlining approval processes and ensuring compliance with company policies and discounting rules.
  5. Capacità di integrazione: Seamlessly integrating with CRM, ERP, and other enterprise systems for real-time data synchronization and comprehensive management of the sales cycle.
  6. Analytics and Reporting: Delivering insights into sales performance, quote conversion rates, and customer preferences to inform strategic decisions.
  7. Vendita guidata: Offering guided selling features that lead sales reps or customers through the product configuration process, matching customer selections with appropriate product offerings.
  8. Mobile Accessibility: Equipping sales teams with the ability to configure, price, and quote on the go, enhancing flexibility and responsiveness.

By incorporating these features, Epicor CPQ enhances the efficiency and accuracy of the sales process and enriches the customer experience.

How CPQ Systems Address O2C Challenges

Let’s now take a closer look at how CPQ obtains these benefits.

Streamlining Order Management

CPQ systems streamline the order management process, a crucial component of the order to cash cycle.

Businesses that use best-in-class order to cash tools like Software CPQ sono 81% more effective at order management than those that don’t.

CPQ automates and streamlines order creation through several mechanisms:

  • Automated Configuration: CPQ tools enable automatic configuration of products or services, ensuring all customer requirements are met accurately. This meets the need for products with multiple variables, customizations, and dependencies.
  • Integration with Multiple Sales Channels: CPQ systems integrate with your eCommerce website, the websites of your distributors, and various internal and external systems, ensuring a unified approach to order management.

Improving Accuracy in Pricing and Quotations

The O2C process is inherently complex, but once you begin offering the configurable products customers demand, it can be overwhelming–until you use CPQ.

CPQ offers an effective solution to pricing and quoting complex products:

  • Dynamic Pricing Models: CPQ systems can handle complex pricing models, including volume discounts, promotional offers, and contract-specific pricing, ensuring accurate prices are quoted every time.
  • Customized Quoting: The ability to generate tailored quotes based on specific customer needs and preferences is a crucial feature of CPQ systems, which enhances the relevance and appeal of the offers to customers.

Enhancing Customer Experience

Deliver a first-class customer experience, and your business will outcompete those who don’t.

According to a recent Forbes article, companies with a customer experience mindset drive 4-8% higher revenue than the rest of their industries. That's why 80% of leaders plan to increase customer service budgets over the next year - they recognize the competitive advantage an outstanding customer experience can provide.

CPQ systems enhance customer experiences with the following:

  • Interactive Product Selection: With features like 3D visualization, customers can interactively select and customize products for a thoroughly modern experience.
  • Personalized Recommendations: CPQ tools can offer personalized product recommendations based on customer preferences and past interactions–key insights that can help you sell more products. (Companies that use Epicor CPQ increase average conversion rates by 40%.)

Integrating with O2C for Efficient Data Management

CPQ systems create a single source of truth that extends through the order to cash process.

It plays a key practical role in the back-end of the sales process, supporting seamless data flow and management:

  • Seamless Data Transfer: CPQ systems can integrate with ERP and CRM systems, allowing real-time data transfer across the order to cash cycle, from order placement to payment collection.
  • Centralized Data Management: Integration centralizes data management, reducing data silos and ensuring all departments have access to the up-to-date information they need to ensure a smooth order to cash process.

Reducing Manual Workload

CPQ is driven by automation. You collect orders from customers, which automates the production of quotes, invoices, CAD files, and bills of materials (BOMs).

Consider how much time that saves for departments party to the O2C process across production, fulfillment, and accounts receivable.

  • Automation of Routine Tasks: CPQ systems automate routine tasks like data entry, quote generation, and pricing calculations, freeing up sales teams to focus on strategic activities.
  • Reduction in Errors: Automating these processes reduces the likelihood of human error, leading to more accurate sales operations.

Compliance and Security

CPQ systems enable communication and collaboration without compromising security and privacy. Epicor CPQ delivers enterprise-grade security to protect data as it travels over networks and systems.

  • Data Security: CPQ tools have robust security measures to protect sensitive customer and transaction data. They enable multiple teams to access critical data through the same secure portal.
  • Conformità normativa: These systems can be configured to ensure compliance with various industry-specific regulations and standards, reducing the risk of penalties and fines.


The order to cash (O2C) process shapes the all-important customer experience, laying the foundation for lasting, highly profitable customer relationships. Yet it also surfaces complex challenges that multiply as businesses strive to deliver seamless omnichannel purchasing and complex, customizable products.

In meeting these demands, however, lies the rich potential for setting your O2C workflow and your company apart through savvy automation, optimization, and differentiation.

Epicor CPQ software enables precisely this. It streamlines virtually every aspect of the O2C process, enhancing accuracy in pricing and quoting, supporting configurable products, and delivering first-class experiences that capture repeat business.

Discover more about how Epicor CPQ can transform your business operations.

Order to Cash FAQ

How can optimizing the O2C process improve cash inflow for a business?

Optimizing the O2C process can significantly enhance the amount of cash flowing into your business.

By streamlining each step, from order management to cash application, businesses can reduce delays in payment collections, thereby ensuring a steadier and more predictable cash flow. Efficient process management in O2C directly contributes to quicker invoice processing and faster payment cycles.

What are some best practices in O2C process flow to enhance customer relationships?

Focus on transparency, communication, and efficiency. Providing clear and regular updates on order status, accurate invoicing, and timely delivery are essential.

Additionally, implementing customer feedback mechanisms and resolving issues promptly can greatly improve the customer experience and foster stronger relationships.

How does effective process management in the O2C cash cycle impact supply chain management?

By ensuring accurate order details and timelines, businesses can better manage their inventory and logistics, leading to more efficient supply chain operations.

Can improving the O2C process contribute to better working capital management?

Yes, optimizing the O2C process can bolster working capital management. By streamlining the cash conversion cycle, businesses can accelerate cash inflows through faster receivables collection. This enhances liquidity and available operating capital, empowering organizations to pursue growth investments or rapidly pay down obligations.

What role does cash application play in the O2C process flow?

Cash application plays a crucial role in the O2C process flow as it accurately allocates incoming payments against the corresponding invoices.

Timely and accurate cash application is essential for maintaining up-to-date accounts receivable, providing insights into customer payment behaviors, and ensuring that the business understands its financial position and updates its general ledger accordingly.

How can businesses ensure a smooth cash process flow in the O2C cycle?

To ensure a smooth cash process flow in the O2C cycle, businesses should automate repetitive tasks, maintain accurate data, and implement efficient payment and collection systems.

Technology solutions such as Epicor CPQ software can aid in reducing errors and speeding up the entire process, from order configuration to cash collection, thereby ensuring a smooth and efficient cash process flow.

How does the order to cash process impact revenue recognition and credit risk?

O2C links invoicing, credit management, and account receivables to minimize credit risk and achieve accurate, timely revenue recognition.

It starts with customer invoicing to formally record revenues earned. Credit management follows to assess customer creditworthiness and decide payment terms, mitigating default risk. The amounts owed are then recorded as accounts receivable, representing the legal claim to payment.

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