Why you should automate customer orders to optimise your Order-to-Cash process

The Order-to-Cash (O2C) process is critical and complex for any organization. Inefficient manual O2C processes can negatively impact business outcomes and damage customer relationships. Since the exchange and processing of B2B documents is central to the O2C cycle, automating document processing is crucial to achieving order-to-cash automation. Automated customer order processing is particularly important in automating the O2C process. The Netfira Platform automates incoming customer orders in just six simple steps, which helps sales teams achieve greater transparency and efficiency by optimising the O2C process. 


What is the Order-to-Cash process?

Order to cash (OTC or O2C) refers to one of the most critical and complex business processes for receiving and processing customer orders and revenue recognition. It involves the entire process of receiving a customer’s order, from the point of ordering to the customer’s payment of their outstanding account. 

O2C encompasses all the steps involved in processing customer orders, from the moment a customer places the order to when payment is received and applied to accounts receivable. These steps include order management, order fulfillment, billing, payment processing, and reporting. 

The Order-to-Cash process is primarily assigned to the sales department within a company since it is an order process seen by the supplier. The Procure-to-Pay (P2P) process, on the other hand, is equivalent to the Order-to-Cash process but from the procurement side. 

Automating O2C processes is crucial in achieving greater efficiency and customer satisfaction. With automated document processing, such as that offered by the Netfira Platform, incoming customer orders can be automated in just six steps, improving transparency and efficiency in the O2C process. 

The four phases of the Order-to-Cash process

The O2C process can be roughly divided into four phases: 

1. Pre-sales activities

Pre-sales activities refer to the actions that take place before an order is processed. It starts with the contact between the customer and the company. Usually, the customer makes a non-binding inquiry in advance, which involves comparing their needs with the product or service. This is followed by an offer containing all the important information for a potential order. 

2. Customer order processing

The processing of the customer order is the central element of the Order-to-Cash process. In most cases, the customer order contains numerous pieces of information, such as the price, key data on goods and/or services, delivery quantity and data, shipment and payment terms. 

3. Shipping

The order processing is followed by the shipment of goods or, alternatively, by providing the respective service.

4. Invoicing

Once the goods are delivered, the next step is the payment process. Normally, payment is made as soon as the customer has received the ordered goods or service. However, advance payment is also possible. Invoicing also includes receivables management and the possible creation of credit notes. 

Challenges that businesses face in the Order-to-Cash process

The Order-to-Cash process presents several challenges for businesses, with many companies struggling with slow and error-prone manual processes. One significant challenge is the high risk of input errors, which can lead to customer complaints and delays in payment processing. In a study by the Institute of Finance and Management, 51% of respondents reported experiencing an increase in customer complaints due to O2C issues. Additionally, paper-based processes can be time-consuming and prone to mistakes, leading to increased costs and inefficiencies. These challenges can impact businesses’ bottom lines and damage customer relationships, making it essential to streamline and optimise the O2C process. 

Order-to-Cash process automation through document automation

Document processing plays a central role in the O2C process. While the O2C cycle encompasses many sub-processes and documents such as quotes, shipping notices, and invoices, processing incoming customer orders lies at the heart of the process. However, in many companies, the sales process remains predominantly paper-based, manual, and time-consuming. Sales teams need to manually compare and validate data from customer orders and enter them into downstream systems, which poses significant challenges. Managing multiple paper documents is challenging, prone to errors and inaccuracies, and slows down employees and workflows, thereby negatively impacting the entire O2C process. Order-to-Cash automation can only succeed when customer orders are processed automatically. 

Benefits of automating customer orders

Digitizing documents in a company’s sales process, such as incoming customer orders, can significantly increase operational efficiency. Automated processing of customer orders can reduce costs by up to 30%. This is because automated document processing eliminates the need for tedious manual data entry. As a result, input errors are minimized, processes are sped up, and employees are freed from non-value-adding work. Overall, the O2C process becomes more transparent, reliable, and faster. 

How to automate customer orders with Netfira

Netfira’s cloud-based SaaS solution automates the bidirectional exchange of B2B documents and data. The Netfira Platform automatically extracts relevant data, processes it intelligently, and exports it to any ERP system. By automating the processing of incoming customer orders, businesses can optimise their O2C process and relieve employees. The automation of the document workflow comprises 6 steps:

  1. Connecting business partners 

With the Netfira Onboarding App, sales teams can quickly, easily, and cost-effectively connect with business partners. The onboarding process consists of three simple steps and usually takes only a few minutes. The AI-supported app technology can process and harmonize unstructured data or free texts in customer orders automatically, achieving exceptional data accuracy and minimizing the need for manual changes and corrections. With these mechanisms, Netfira connects business partners to its digitization process and creates recognition profiles for incoming customer orders. 

2. Extracting data from customer orders 

After the Netfira Platform recognizes the documents of the connected business partners, the data stored for the Netfira customer in the recognition profile is automatically extracted from the document. 

3. Enriching data 

If required, the extracted data can be enriched with additional data that is important for sales and its subsequent system but is not included in the business partner’s documents. 

4. Comparing data 

The extracted data from the customer orders can be compared with master data provided by the Netfira customer using an application programming interface (API) or file interface. For example, the system can verify whether the article number provided on the business partner’s document corresponds to the article number in the sales system. 

5. Providing extracted data 

The extracted data is provided to the sales department in an individual data exchange format. Possible formats include SAP-IDoc, ORDERS-edi format, XML, or CSV data file. 

6. Importing data into the ERP system 

The provided data is imported into the ERP or merchandise management system of the sales department. Import is possible into any system that can transfer extracted and provided data from a data source into the sales order entry. 

Sales benefits from automated customer orders and an optimized O2C process

Cumbersome and labor-intensive O2C processes can cause significant problems for businesses and their customers. Slow and error-prone processes can hurt cash flow, lead to shipping delays, and result in a poor customer experience. However, by automating the processing of incoming customer orders, the O2C process can be noticeably optimised, resulting in numerous benefits. 

Automated document workflows can significantly increase the accuracy of data entry, reducing the risk of input errors and freeing up employees from time-consuming and repetitive tasks. This automation can also speed up processes and allow businesses to make faster decisions. 

With greater visibility into the O2C process, sales teams can make better decisions and respond more quickly to changing market conditions. Additionally, automated document workflows create transparency and efficiency, enabling businesses to identify and address any issues that may arise in the process. 

Overall, automated document workflows in the O2C process can provide businesses with numerous benefits, including improved data accuracy, faster decision making, greater visibility into cash flow, and a better customer experience. 

Pfleiderer Case Study

Learn how Pfleiderer successfully digitised its procurement through process automation.