Critical Business Process that runs any business. Here are fundamentals and ways to help understand and measure.

1. QUOTE-ORDER TO CASH
“ Cash is King”
John Choate
VP Membership, Phoenix Chapter
May, 2020

2. TABLE OF CONTENTS
What is Order To Cash?
Why is it important?
What are top pressures?
What are 9 symptoms of inefficient
O2C process?
What are the elements of O2C
process
Order To Cash Key Elements
Customer Order
Credit Assessment
Order Fulfillment
Billing/Invoice
Customer Payment
G/L Posting
Enterprise O2C
Finance O2C
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Ways to Improve O2C Process
Top Metrics
Benefits
Key Take Away’s
Questions
About the Author

3. WHAT IS ORDER TO CASH?
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❖ The order-to-cash, also known as the O2C or OTC,
process, refers to a company's business process
for the entire ETE order processing system.
❖ It helps define success as a company and
relationships with customers.
CASH IS KING !
• Lifeblood of any company and
• It flows through the ETE order-to-cash cycle.

4. WHY IS IT SO IMPORTANT?
The heart of your
operation
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If this all-important
aspect of your business
is not handled in the
most cost-effective and
efficient manner, your
bottom-line will suffer.
Every aspect of your
company is affected by
the order to cash cycle.
If your process is
broken, customers will
eventually lose faith in
your services and find
another supplier.

5. TOP PRESSURES
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1. Reduce Costs
2. Risk of customer default
3. Customer demand for better service
4. Poor cash flow forecast
5. Rising costs of service
6. Pressure to extend payment terms
Source:
Aberdeen
Group

6. 9 SYMPTOMS OF AN INEFFICIENT ETE O2C PROCESS
✓ No Standard ETE O2C Process
✓ Wide variety of ERP Systems in
use
✓ Delivery Fulfilment Issues
✓ High # of Errors In Order Taking
✓ Master Data Issues
✓ High Volume Of Manual Entries
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✓ High DSO
✓ Lack Of Clearly Defined,
Meaningful KPI's/Metrics
✓ Lack Of Sufficient Control
Framework

7. THE “SIMPLE” ORDER TO CASH PROCESS
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8. THE O2C PROCESS - RECEIVE ORDER
Receiving orders
• This is the beginning of the order to cash cycle
• May include delivering a quote for goods/services
and receiving the order for purchase.
• This is your initial contact with a potential customer.
• If you lose them here, chances are they won’t
be back.
• This process needs to be easy and efficient for your
customers.
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9. THE O2C PROCESS – CREDIT ASSESSMENT
Credit assessment
✓ If customers are buying with credit card or paying
over time, you’ll have to do a credit approval before
the transaction is completed.
✓ Note: The customer credit assessment process had
more impact on the order-to-cash cycle than any
other element.
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10. THE O2C PROCESS – FILL ORDER
Order fulfillment
➢ This is when your product/service is prepared for
shipment and then delivered to the customer.
➢ Not having orders delivered on-time or delayed is
one of the quickest ways to lose a customer.
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11. THE O2C PROCESS - BILLING OR CREATING AN INVOICE
Billing
❑ The billing step of the order to cash cycle involves
generating and delivering an invoice for goods/services
to the customer.
❑ One must have a clear-cut payment policy and your
customer need to be familiar with and understand the
payment terms before the sale of product/services.
❑ Clearing up any confusion in the beginning will avoid
late and missed future payments.
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12. THE O2C PROCESS - RECEIVE PAYMENT
Receiving payment
▪ Invoice collection, which may also involve collection of
payments due from the customer.
▪ This can sometimes be the hardest part of the process,
receiving the payment.
▪ It can also point out any deficiencies in your billing process
such as the possibility that the customer never received an
initial invoice.
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13. THE O2C PROCESS - DOCUMENT PAYMENT
Payment documentation
Recording payments in the General Ledger.
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14. ENTERPRISE ORDER TO CASH
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15. FINANCE ORDER TO CASH
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16. WAYS TO IMPROVE O2C PROCESS
Streamlining administrative
processes to remove “non-value”
added steps
Many processes can be sped up
with automation;
➢ Quoting
➢ Sales order processing and
management
➢ Billing/invoicing
➢ Credit management
➢ Invoice collection
➢ Cash application
Increasing the usage of
electronic invoicing
Many customers prefer electronic
invoices over printed. So providing
them with that option can help one
get paid before other vendors.
This helps to;
1. Increase customer satisfaction
2. Reduce days sales outstanding
(DSO).
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A/R automation
Centralize accounts receivable
information and activities in one
system and this can assist collect
the money owed being received
faster.
Allows time to automate one’s most
time consuming tasks with features
that allow :
▪ Sending payment reminders and overdue
notices
▪ Prioritizing collector activities
▪ See real-time accounts receivable metrics
▪ More accurately forecast cash
▪ Better identify and manage credit risk
▪ Settle disputes faster

17. TOP METRICS TO CONSIDER FOR ORDER TO CASH PROCESS
❖ Total order-to-cash process cost as a percentage of
revenue
❖ Total order-to-cash process cost per order-to-cash
FTE
❖ Days sales outstanding (DSO)
❖ Operating cycle
❖ Percentage of order-to-cash key controls that are
automated
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18. BENEFITS
➢ A reduction in days sales
outstanding, essential in
improving a company’s cash
flow
➢ A reduction in order-to-fulfill
cycle time
➢ Greater visibility of exceptions,
for faster intervention and
resolution, resulting in fewer and
less impactful order to cash
interruptions
Important yet less quantifiable benefits,
including:
❑ Faster conversion of receivables
❑ Expedited collections
❑ Improved accuracy of invoicing,
collections and cash flow reports
❑ Reduced exceptions
❑ Improved ability to resolve
customer disputes due to better
visibility across the entire O2C
process
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19. KEY TAKE AWAY’S
❖ Set of business processes to manage from sales
order to customer payments.
❖ CASH IS KING = Lifeblood of any company
❖ Bad Processes = Cash Flow Issues & Customer
Service
❖ Ways for O2C Process Improvement; Reduce
non value steps, Electronic Invoices, and
Automate A/R.
❖ Top Benefits; Reduced DSO, Lower Fulfillment
cycle time, and better visibility to stop
disruptions.
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20. QUESTIONS
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21. ABOUT THE AUTHOR
From the USAF as a Logistics Squadron Budget Officer to having P/L responsibility for a company’s critical
processes, O2C is a top process that John has not only understood and practiced, but insured his tactical teams
understood it because of its impact on Company/SBU cash flow, employee productivity and outstanding customer
service.
As a SAP Ariba Business Processes Consultant/PM, the delivery of “World Class” integrated ERP
processes/solutions that add “VALUE” are critical to insure their Customers Maintain/Increase Market Share,
improve profitability and increase team productivity.
John has a BS (WA State), MS (Troy State) and Executive MBA (Pepperdine University).
John is a Volunteer as the VP Membership of PMI – Phoenix Chapter.
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22. THANK YOU
JOHN CHOATE
VP MEMBERSHIP – PHOENIX CHAPTER
VPMEMBERSHIP@PMIPHX.ORG
650-390-3251 (MOBILE)