The Invoiced Order-to-Cash Process Guide

Published on October 4, 2022

Business leaders are often focused on the activities that drive sales and lead to order placement. However, the order-to-cash process that occurs post-purchase is also vital to your company’s financial health and its relationships with customers. In this guide, we cover what you need to know, starting with what the order to cash cycle is and why it’s so important for your business. We also dive into each step of the process, highlight common challenges, and discuss order-to-cash best practices.

What is the Order-to-Cash (O2C) Process?

The term “order to cash” refers to the finance-related aspect of selling products or services to customers. The order to cash process—or order to cash cycle—involves a series of steps for managing, fulfilling, and receiving payment for customer orders. This guide outlines eight core components of the order-to-cash workflow: order management, credit management, fulfillment, shipping, invoicing, accounts receivable, collections, and reporting.


Activities in the order to cash process can impact a company’s inventory management, supply chain management, and workforce management. A bottleneck occurring in a phase of the order to cash cycle can easily disrupt operations elsewhere.

In addition, an organization’s order-to-cash process directly impacts its working capital. Delays in the collections component of the cycle can affect business functions that require spending, including payroll.

And finally, sending accurate orders on time, invoicing effectively, and collecting payments properly are all key in maintaining strong customer relationships.

O2C Process Steps

The order-to-cash process flow chart below shows the eight key steps in the cycle. For businesses to receive timely payment, each step in the process must run smoothly.

order-to-cash process flow chart

Order management

The initial step in the order-to-cash process begins when a customer purchases a product. After the purchase is confirmed, the business needs to process the order and notify all of the parties involved in fulfilling it. Many companies automate this workflow so that as soon as a customer places an order, all relevant parties receive notifications instantly and the proper series of actions take place.

Any errors that occur during this foundational step will create issues throughout the rest of the order-to-cash process. For example, if the shipping department fails to receive an order notification, a product may be sent to a customer later than promised or not sent at all. Businesses still performing order management manually should double-check the items and information involved in the process to minimize error.

Credit management

In the credit management phase, a company assesses a customer’s financial health to decide whether it will extend credit. Businesses may engage credit professionals to analyze various data points in making this determination; however, credit approval can also be largely automated, with alerts set to notify personnel in cases requiring further review. In addition to checking financial health for credit purposes, companies looking for upselling opportunities may also run the assessment process with customers that pay upfront for products or services.


During the fulfillment stage, a business prepares an order for shipment or schedules an appointment to provide a service. If the company’s processes are automated, its shipping department or service department will have already received an order or service notification.

For product orders, a company’s supply chain and inventory operations are key. Supply chain and inventory data must be kept current to avoid selling items that are no longer in stock or keeping customers waiting for orders.


In this phase, a business delivers its products and services to customers. A company that’s shipping goods can automate much of the process—when a customer makes a purchase, the order will trigger shipping label generation and all necessary notifications.

Since this step often involves relying on another company for delivery, it can be the most unpredictable. With the right automated platform in place, businesses receive notifications about deliveries that are taking longer than expected, allowing them to provide customers with updated arrival dates.


Unless a customer pays for an order when placing it, a business must create and send an invoice to receive payment. A company’s invoices should be itemized and easy to understand by its customers and its accounting department. Plus, it should clearly state payment terms (for example, informing customers that payment is due within 30 days).

Many automated order-to-cash workflows generate invoices without any manual input required. Companies simply review the documents for accuracy before sending them to customers.

Accounts receivable

An accounts receivable function tracks outstanding invoices until customers pay them. When automated, the process involves sending alerts to accounting staff at set times before invoices are past due. These notifications allow accounting teams to check invoices for any errors that might be delaying payment. For instance, a pricing mistake may be keeping a customer from paying for a product or service.

To keep the order to cash process running smoothly, companies can also email reminders to customers or, with an automated platform, set and send regular notifications. Communicating at regular intervals can help businesses shorten the invoice-to-payment window.


For invoices that are overdue, businesses need an effective collections process. But the first step is ensuring that customer payments are properly logged when received. Customer relationships will suffer if a company requests funds for invoices that have already been paid.

With an automated platform, a business can instantly log customer payments and send updates to all necessary parties. Past due invoices can be automatically flagged for further action, whether it’s following up with additional communications, putting customer credit on hold, or involving a collections agency.

Data management and reporting

Data management and reporting are vital in optimizing the order to cash cycle. Automatically generated metrics and reports reveal how well the process is going and where companies order-to-cash. For example, tracking days sales outstanding (DSO)—the average number of days a business takes to receive payment following a sale—provides valuable insight into the effectiveness of the operation overall and any measures taken to better it.

Order-to-Cash Process Challenges

For an order-to-cash process to run smoothly, many moving parts need to work well together. If one step fails, the entire cycle can break down. Businesses often struggle with:

  • Errors in orders, which require precious time and resources to correct—not to mention issues with customers
  •  Manual invoicing, which is also time-consuming and can delay and complicate other business functions
  • Customer experience, which can easily be diminished by bottlenecks or errors in the order to cash process
  • Data breaches, which can impact a company’s brand and also erode customer satisfaction

Order-to-Cash Process Best Practices

Best practices for improving the order to cash cycle include:

  • Creating standards to establish consistency across order to cash operations. When teams repeatedly perform the steps involved, the workflow gets faster and smoother.
  • Tapping into the right technology, including automated accounting platforms with AI functionality. You’ll integrate teams and processes in a central hub, reduce error, keep data updated in real-time, and drive down costs.
  • Offering a self-service portal that allows customers to pay invoices easily and frees accounting staff to focus on other tasks.
  • Monitoring and analyzing performance regularly to optimize your process. Don’t forget the final step in the order-to-cash process—in addition to using metrics and reporting to improve, encourage input from teams involved in the order-to-cash cycle.

Navigate the O2C Cycle with Invoiced

Wondering how your business can optimize and accelerate its order to cash cycle? At Invoiced, we help companies get paid faster—14 days faster, on average. Find out more about our automated accounting platform now:

Published on October 4, 2022

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