Order to Cash
What is Order to Cash?
Order to Cash (O2C or OTC) is the entire business process from when a customer places an order until you've got their payment in your bank account. It covers order management, fulfillment, shipping, invoicing, collections - basically every step between "we want to buy something" and "thanks for the money."
But here's what O2C really is: it's every department in your company trying to work together while using different systems, different metrics, and different definitions of success. Sales wants to book revenue. Operations wants to ship efficiently. Finance wants to get paid. And somehow this is all supposed to flow smoothly.
Spoiler: it usually doesn't.
What Does O2C Actually Look Like in Most Companies?
In theory, Order to Cash is this beautiful flowing process. Customer orders, you fulfill, you invoice, you get paid. Clean and simple. In practice? It's a hot mess of handoffs, delays, and finger-pointing.
Your sales team takes an order with special pricing that nobody told finance about. Credit needs to approve the customer but they're backed up. The order sits in limbo for three days. Finally gets approved, moves to the warehouse, but wait - inventory's wrong because somebody forgot to record a return. Now you're expediting a shipment that costs twice what you'll make in margin.
The invoice goes out late because accounting was waiting for the freight charges. Customer receives it but routes it to the wrong department. Thirty days later you're calling to collect and they say "what invoice?" Another fifteen days of back and forth. By the time you get paid, it's been 67 days and your CFO is asking why DSO is trending up.
And this is for a clean order. Don't even ask what happens when there are changes, returns, or disputes involved.
Why Do Companies Finally Fix Their O2C Process?
Usually, it takes a crisis. Maybe you're growing fast and suddenly realize your scrappy processes don't scale. Maybe you just lost a major customer because of repeated fulfillment issues. Or maybe - and this is surprisingly common - someone actually calculates how much the O2C mess is costing and everyone has a collective heart attack.
Think about it - companies often discover they're spending a shocking percentage of revenue just managing the O2C process. Not cost of goods or shipping - just the cost of processing orders through their Byzantine system of spreadsheets and manual handoffs.
The wake-up call often comes when you realize your competitors are operating with 2-day order-to-delivery while you're struggling to ship in a week. Or when your DSO is way above industry norms. Or when your customer service team is so overwhelmed with "where's my order" calls that they can't actually provide service.
What O2C Metrics Actually Matter?
Everyone obsesses over DSO (Days Sales Outstanding), and yeah, it's important. But DSO is a lagging indicator - by the time it goes up, the problems have been festering for months. Here's what you should actually track:
Order accuracy rate tells you if you're starting clean. If orders are wrong from the beginning, everything downstream suffers. Most companies don't even measure this, which tells you everything.
Perfect order rate - the percentage of orders delivered complete, on time, damage-free, with accurate documentation. Most companies hover around 94-96%, which means 4-6% of orders have some kind of problem. That's terrifying when you think about it.
First-time invoice accuracy might be the most important metric nobody tracks. How often is your invoice right the first time? If it's not consistently high, you're creating your own collection problems.
Order cycle time from entry to delivery. Not your promised lead time - your actual performance. The delta between these two numbers is where customer satisfaction goes to die.
How Does Automation Transform Order to Cash?
This is where automation changes the entire game. When orders flow automatically from customer to fulfillment, you eliminate the lag time and errors from manual entry. When inventory updates in real-time, you stop promising stock you don't have. When invoices generate automatically from validated shipment data, they're actually correct.
Look at what modern order automation platforms are doing. They're not just digitizing documents - they're automating the entire flow of information through the O2C process. Order comes in via EDI, email, or portal. Gets validated against business rules. Checks credit automatically. Allocates inventory. Triggers fulfillment. Generates shipping docs. Creates an accurate invoice. Sends it to the customer in their preferred format.
No manual touchpoints. No delays for approvals. No errors from rekeying data.
But here's the key: you can't just automate parts of O2C. Automating order entry while keeping manual invoicing is like upgrading to a Ferrari engine but keeping bicycle wheels. The constraint just moves downstream.
Why Is O2C Integration So Hard?
The dirty secret of O2C optimization is that it requires every system to talk to each other. Your CRM needs to share customer data with your ERP. Your ERP needs to update your WMS. Your WMS needs to talk to your TMS. Your TMS needs to feed back to your ERP for invoicing.
Most companies have what I call "swivel chair integration" - people literally swiveling between screens to copy and paste data. It's 2025 and your order entry person is still manually entering orders from the CRM into the ERP because "that's how we've always done it."
The platforms that win are the ones that connect these systems without requiring a complete rip-and-replace. Crew Capable specializes in exactly this - connecting your existing ERP, CRM, and WMS so data flows automatically without the massive complexity of traditional middleware. You get the integration power you need without needing a team of developers to maintain it.
What Are the Most Common O2C Problems?
"Our DSO keeps increasing" Real cause: Your invoice accuracy isn't great. Fix the invoice process before you blame customers for slow payment.
"Orders take forever to process" Real cause: Too many approval steps that add no value. That credit check for a customer who's been buying for 10 years? Waste of time.
"We keep shipping the wrong things" Real cause: Your order entry process doesn't validate against what's actually available. You're taking orders for configurations you can't fulfill.
"Customers complain about not knowing order status" Real cause: You have no automated communication. They shouldn't have to call for updates - updates should flow automatically.
"Our margins are shrinking" Real cause: Expedited shipping to fix preventable problems. Calculate how much you spend on overnight shipping that wouldn't be needed with better processes.
How Can You Make O2C Less Painful?
Start by mapping your actual process, not the one in your procedures manual. Follow 10 orders from entry to cash. Document every touch point, every delay, every system. You'll be horrified, but at least you'll know what you're dealing with.
Focus on the biggest constraint first. Usually, it's order entry or invoicing. Fix that before optimizing everything else. There's no point in having a super-efficient warehouse if orders sit for days waiting for entry.
Standardize before you automate. If every customer has completely different processes, automation becomes impossibly complex. Find your 80/20 - the 20% of customers who drive 80% of orders - and standardize their processes first.
Get all stakeholders in a room and define success metrics together. Sales, operations, and finance need to agree on what "good" looks like. Otherwise, you're optimizing different things and working against each other.
Frequently Asked Questions About Order to Cash
Is O2C the same as Quote to Cash?
Quote to Cash includes the quoting and configuration process before the order. O2C starts when the order is placed. Q2C is broader but most people use the terms interchangeably, which drives consultants crazy.
What's a good DSO for our industry?
Depends entirely on your terms and industry. If you offer net 30 terms, DSO under 40 is good. Net 60? Under 70 is fine. The key is trending - is it getting better or worse?
Should we outsource parts of O2C?
Lots of companies outsource collections or even order processing. It can work, but you lose control and visibility. Better to automate than outsource, in my experience. At least then you own the process.
How long does it take to fix O2C? For meaningful improvement?
6-12 months minimum. Anyone promising to transform your O2C process in 90 days is selling snake oil. This touches every part of your business - it takes time to do right.
Stop the O2C bottlenecks killing your cash flow. See how order automation eliminates manual handoffs from order entry through payment - connecting your systems so orders flow automatically while giving you the visibility to actually manage the process.