The order-to-cash cycle is the set of business processes associated with receiving a customer order through to the customer’s payment.
As described in our recent article entitled Definition of Logistics in 100 Words, logistics is the subset of processes that fall under supply chain management that plans, executes, reports and coordinates the movement of goods within an organization’s network of stakeholders that include:
With the above in mind, logistics and supply chain management is “the” business segment companies need to focus on to optimize their O2C cycle.
The importance of an efficient O2C is because the quicker a company can transform their raw good into a salable product to be received and billed to the customer the less cash will be tied up in the various stages of inventory, which will then provide more resources needed to further invest in its growth and prevail over its competition.
Below is a tremendous infographic from SalesForce thoroughly outlining the O2C processes and its impact to cash.
More articles of intersted associated with order-to-cash include: