EDI Order-to-Cash Process Overview - How do you get Control?

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Order-to-Cash Process

The Order-to-Cash (O2C) process is when suppliers process, fulfill, and invoice customer orders. The Order-to-Cash process starts with a supplier receiving an order from a customer and ends when the supplier receives payment from the customer for the order. 

An efficient Order-to-Cash process ensures a good customer experience so customers will use the supplier again in the future, thus improving retention rate and growth. However, traditional methods rely on humans to facilitate communication between the supplier and customer, as well as to carry out each step of the Order-to-Cash process. Human intervention often delays the process since humans take breaks, make errors, and work slower compared to newer technology solutions that are available. 

Something to note is that the traditional Order-to-Cash cycle is highly relevant to the sales department. This is because for a customer to place an order, they have to engage with someone from the supplier's sales team.

Comparison With Purchase-to-Pay Process

The Order-to-Cash process is very similar to the purchase-to-pay process, which is also called the procure-to-pay process. The difference is that Order-to-Cash is from the supplier's side, while purchase-to-pay is from the buyer's side. Therefore, the purchase-to-pay process starts with a customer placing an order with a supplier and ends with the customer paying for the order after it's been fulfilled.

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Common Issues With Legacy Order-to-Cash Processes

Legacy Order-to-Cash processes remain largely unchanged. While once the gold standard of order fulfillment, advancements in the fulfillment space now highlight the shortcomings of legacy Order-to-Cash processes. 

Common Issues Include:

• Human intervention that results in errors and delays, leaving customers dissatisfied 
• Slower overall processing times
• Siloed systems and applications with poor visibility
• Complex, custom-coded solutions that require consistent maintenance 
• Inability to quickly scale based on market demand
• Different document and protocol requirements for each customer
• Relying on separate backend systems including ERP, CRM, and TMS to get an order fulfilled
• Different systems need certain document types and formats such as iDOC, EDI, EDIFACT, and pdf

Order-to-Cash Process Modernization Through EDI

Modern Order-to-Cash procedures rely on the use of electronic data interchange (EDI) transactions. In this context, electronic documents are exchanged among participating businesses, eliminating the necessity for manual human involvement in the process.. EDI is the digital transfer of business documents between trading partners in a standard electronic format. This process allows suppliers and buyers to send and receive information about orders, transactions, and messages, in a standardized, digital format.

Conclusion

EDI helps you to work more efficiently. By replacing paper documents, companies save time and money while reducing the risk of errors. In addition, customer satisfaction can be increased through faster delivery, fewer downtimes and fewer errors in order fulfillment. Choosing the right EDI solution is crucial to success. Companies must take into account speed, reliability, user-friendliness and integration options.

Would you like to know more about how the implementation of the right EDI solution will help you work more efficiently and increase your customer satisfaction? Then contact us today to find out how.