Optimizing your order-to-cash process: A PEX Network guide

PEX Network speaks with industry professionals from the likes of Duracell and Amazon Web Services to uncover key challenges and best practices for optimizing order-to-cash

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Adam Jeffs

How order-to-cash benefits processes

Order-to-cash (OTC) refers to an organization’s end-to-end process for handling customer purchases, spanning from order through to payment. The OTC process for a brick-and- mortar retail store can be as straightforward as exchanging cash for an item, or more complicated and challenging through the sale of software or a service to another organization.

Given that the OTC process directly defines how revenue is brought into a business, its efficiency can have a significant effect of the bottom line of an organization. An inefficient OTC process is easy to identify through metrics such as long lead times, high volumes of shipping errors and late payments. These are issues that an organization will be forced to spend considerable amounts of time and resources addressing. Therefore, the optimization and automation of an OTC process should be a top priority for organizations that want to be competitive.

The benefits of optimizing OTC processes are more pronounced than ever following the shutdown forced on many businesses around the world due to Covid-19. Ensuring that clients or customers pay on time can be challenging, particularly for organizations which employ a manual OTC process. An optimized OTC process could be the key to maintaining cash flow for an organization during a crisis and ultimately ensure their survival by enabling quicker delivery to and payment from clients, and improving customer service and loyalty.

How OTC works

To understand how the OTC process can be optimized, it is important to first understand how the OTC cycle works. While it may differ between industries and organizations, it can generally be refined down to six stages, spanning almost all departments in an organization.

The departments, which include sales, accounts receivable/accounting and logistics, among others, all interact with the cycle in its own way. Ensuring that these departments are aligned in their goals represents a significant task.

  1. Order is received

The cycle begins when a customer places an order for goods or services, which will be registered via an order management system. If this stage of the OTC cycle is not optimized, an organization will feel the effects through shipping delays, shipping errors, late payments and many other headache-inducing concerns.

  1. The order is filled or the service is scheduled

Once an order is received a business will take steps to fulfill that order, whether that is by delivering the product or scheduling the service that has been paid for.

In an optimized OTC cycle the order management software will be directly linked to the order fulfillment or ecommerce system, providing pickers with all the information they need to quickly locate the item. If a customer has ordered a service, the information should be sent to operations or scheduling to expedite the process of delivering this service.

  1. The order is shipped and tracked

In the case of physical goods, the order needs to be shipped to the customer as soon as possible. Ensuring that the shipment is tracked is vital for ensuring customers' peace of mind if they enquire about the status of an order. For organizations selling services or digital goods, this stage will involve granting access to the software or service.

  1. The invoice is sent

Invoicing is a crucial part of the OTC cycle and ensuring it is accurate and efficient is how an organization keeps its finger on the pulse with regards to the bottom line. It provides visibility over what items have been purchased and at what price, and can identify monetary discrepancies and handle payment disputes.

  1. Payment is collected

At this stage the customer sends payment for the invoice. Ideally there will be multiple payment options to choose from to make it easier for the customer, which should accelerate the payment.

If there are any issues with payment at this stage, a member of the accounts receivable team should reach out to correct them either to explain the procedures necessary to correcting the order or, depending on the severity of the issue, even reviewing penalties that the customer could incur.

  1. Receipts processed, returns managed and sales reporting updated

The cycle is complete once the payment is recorded in the organization’s accounting books by the accounts receivable department, before starting again once a new order is placed.

Key challenges and hurdles

Despite the critical importance of the OTC process and the issues an organization can experience if it does not receive adequate attention, many organizations can be hesitant to take the necessary steps to enhance it. This is likely due to the challenges and complexities that come with taking a look under the hood of the OTC cycle.

We see three primary challenges facing PEX practitioners today with regards to OTC:

1. Streamlining a process across several departments

This involves gaining buy-in from all stakeholders across every department in an organization, not just the board, which can be very tricky and time-consuming particularly for larger organizations. Ensuring this buy-in is crucial for departments to get full visibility on what needs to be done, resulting in full engagement from the workforce.

2. Process errors due to manual input

Stages of the OTC process that require manual data input can result in human error and negatively impact the cycle. This can cause a number of issues for customers that are costly to fix, such as a customer receiving the wrong order or cancelling an order due to overdue delivery.

3. Lack of communication between departments

An optimized OTC cycle requires clear visibility and communication across all departments and in siloed businesses, ensuring that every part of the cycle is optimized can be challenging.


Given the implications of a poorly optimized OTC process, there can be pressure on PEX practitioners to enhance it. Many do not quite know how to focus resources to implement change however


Accounts receivable automation and digitization of payments is becoming more and more popular among organizations looking to enhance the OTC process, with payments by check decreasing from 81 to 42 per cent between 2004 and 2019. IBM Institute for Business Value found that enhanced OTC process flow can improve an organization’s performance by up to 83 per cent, with the same study finding that OTC automation can improve a company’s cycle time by up to 60 per cent.

Automation essentially allows fewer employees to complete more tasks at a faster rate, by removing the need for many tasks to be conducted manually, such as extracting and reviewing external data, scheduling phone calls, sending payment reminders and overdue notices, and fast and accurate invoicing.

Data automation appears to have the most wide-ranging impact across each stage of the OTC cycle, with some organizations that utilize automation employing per function for certain low-value tasks than those that do not. This means more staff and resources are available to tackle the difficult issues that require human interaction and are impacting an organization’s performance such as customer complaints.

How it boosts business results

Organizations that deploy automation have been able to achieve significant improvements in business results. Steven Wurst, former order-to-cash director at Duracell, explains how he built an order-to-cash department from scratch and the benefits of implementing a high level of automation.

“Now we have robotic agents doing the tedious work that is usually handled by people and it is probably the best technology out there for our receivables.”

Wurst explains that this resulted in a significant productivity improvement for Duracell, as the same amount of people are employed but they can focus on meaningful tasks that really make a difference instead of focusing on tedious tasks. He notes that some organizations may push for cost reductions for the order-to-cash process as building the best customer experience can be costly, but in the end focusing on optimized delivery will save organizations money by ensuring client deductions, based on issues such as delivery time or condition, are kept to a minimum.

“You think you are saving six figures from areas where you have cut costs, but if delivery of goods from Walmart for example was optimized, that can account for two or three deductions. These deductions become much more costly than any savings made by executives.”

Getting all stakeholders on board

In order for the OTC cycle to operate at peak efficiency, all the departments involved must work together, with defined and aligned goals across the organization.

In an interview with PEX Network, Bhavesh Joshi, head of asset utilization and global cash flow improvement at Baker Hughes, noted: “This is a process that has a lot of customer touchpoints and has a heavy involvement of people, both of leadership as well as staff.” Joshi explained how Baker Hughes had made life easier for its staff by standardizing the way of working across departments for the OTC process by applying Lean Six Sigma tools.

In an organization with departments functioning independently, the employees’ ability to be creative and ‘think outside the box’ are limited. It is important to break down these silos and ensure that each department is working toward the same goal when enhancing the OTC process.

How it boosts business results

According to Juan Sebastian, AR financial analyst at Amazon Web Services and former order-to-cash lead at Thermo Fisher Scientific, demonstrating OTC wins is a successful way to achieve this.

Sebastian offers an example of how he was able to boost business results for two divisions at Thermo Fisher Scientific, a global scientific provisioning organization, servicing healthcare, life sciences and other laboratory based fields. He noted that one of these departments had a high level of accounts receivable (AR), days sales outstanding (DSO) and bad debt.

Sebastian launched a Kaizen event and found that categorizing invoices could greatly assist departments with identifying root causes of the key issues. Ensuring all divisions worked together was a challenge and following the Kaizen event, procedures helped to facilitate collaboration across divisions.

The benefits of this were immediately clear, with the division experiencing reduced AR, DSO and reserved balances. One of the most significant benefits came from a key stakeholder, as Sebastian was recognized by a senior finance director for his efforts. Such demonstrable successes will do wonders for stakeholder buy-in to OTC initiatives. This means that any projects attempted in the future are much more likely to be well-received and will garner the necessary support from business leaders, thus facilitating continuous improvement.

Key lessons learned

In this guide we have outlined the key steps involved with the OTC process, and provided visibility on the methods and techniques PEX practitioners can apply to enhance the it, whether by ensuring all departments are aligned or automating aspects of the OTC cycle.

We have looked into the ways that poor optimization of the OTC process can impact the performance of an organization, identified through metrics such as delayed payments, shipping errors and delays. We learned that OTC professionals can experience significant benefits by optimizing the process through methods such as automation or getting stakeholder buy-in.

Once optimized, the OTC process will begin alleviating frustrations experienced by organizations as opposed to creating them, and will remove the headaches caused by the most common OTC issues, freeing up resources and staff to be applied to the more challenging, time-consuming tasks. Organizations that take the plunge into the optimization of their OTC process and automation can rest easy in the knowledge that one of the most important organizational processes is working for them, not against them.