The Order-to-Cash Composite Business Process

The most well-known composite process is order-to-cash. This process flow encapsulates a variety of smaller business processes from order entry to cash receipt. It pulls resources from many different company departments.

Improving the order-to-cash process is a strategic priority for many companies. Typical improvement objectives include fulfillment performance (order accuracy, shipment accuracy, and on-time shipping), financial performance (reduction of receivables, collection management costs, and Days of Sales Outstanding, or DSOs).

Order-to-Cash Process Overview
The acid test of a successful business is customer payments, and the economic well-being of a company is reflected in its accounts receivable (A/R). That is the essence of the order-to-cash process.
The multi-step order-to-cash process originates with a customer order and terminates once the customer pays for the goods or services received and the company applies the cash.

Example of a Composite Process:Order-to-Cash

Five areas are affected by the order-to-cash cycle:

1. Customer,
2. Order entry,
3. Order fulfillment,
4. Distribution, and
5. Finance and accounting.

Since most companies are functionally managed, the order-to-cash process usually touches multiple departments, companies, and back-end enterprise applications. Therefore, it is important for each department to complete its part of the overall process error-free and transfer correct information across functional boundaries.

Order-to-Cash Service Platforms
Businesses are investing significantly in software that integrates various applications and processes onto a single service platform. This way every participant in the composite process has the same view of every action and event.

Companies that implement the order-to-cash process internally often break the process down into smaller pieces (order-to-ship, ship-to-delivery, delivery-to-invoice, and invoice-to-payment).
UPS, FedEx, and others are increasingly offering order-to-cash service platforms to small and midsize businesses. The shippers handle all parts of the end-to-end process: order flow, fulfillment, and payment.

Technical Capabilities of Order-to-Cash Service Platforms
Every robust order-to-cash service platform provides the comprehensive process management capabilities needed to automate the underlying order-to-cash business processes. The combination of robust business process management, componentization of processes and systems, and native support of Web Services standards is at the core of the service platform. Some of the capabilities include:

• Unified process automation and human workflow,
• Automated, intelligent management of data, process exceptions, and errors,
• State management to track, store, and intelligently act on complete status of each step (or state) of a multi-step transaction,
• Transaction rollbacks and compensating transactions,
• Time-based exception management, and
• Adaptable business agents that monitor real-time metrics and adjust themselves automatically according to predefined rules.

The Bottom Line: Order-to-cash composite processes require orchestrating transactions that span multiple separate steps, processed at different times by different systems. Improvements in the order-to-cash performance variables like a single day's reduction in DSO can yield millions in cash flow.