In spite of its daunting-sounding name, OTC order management is a fairly commonplace process that takes place in most sales-based businesses. In a digital sales environment, OTC stands for order to cash. Put simply, OTC order management involves the entirety of the order processing system. This covers everything from the moment when the order is received up until the point where payment is made and logged in your books.
In simpler terms, OTC refers to the business processes that involve fulfilling customer requests (such as selling goods or services) in exchange for money. So, what are these processes exactly? Let's have a look.
Breaking down the order to cash process
As outlined above, the order to cash cycle starts when an order is received and ends when the money is recorded in the general ledger. As it turns out, a lot of things happen between these two points. Scroll down as we go through all the different processes in OTC order management.
1. Order placement
This is where the entire cycle begins. It sounds simple enough, but this step can actually bring serious headaches to a business. An inefficient OTC order management system will inevitably result in delays in order submission and sending out incorrect items to the customer.
As everyone with an online business knows, amending an error is very expensive. It's better to listen to the old saying - prevention is better than cure. Ensure that your order management systems are solid to avoid getting into trouble.
2. Order fulfilment
At this point, you've successfully received the order and sent out an order confirmation email to your customer - well done! Now it's time to inform your warehouse and distribution teams about the order so they can pick it and pack it. Easy, right? Well, only on paper. The truth is that liaising with your distribution team to ensure the smooth running of operations can be tricky.
That's why we recommend having a solid order management system (OMS) in place. A good OMS will put you in the driving seat by providing you with a one-stop solution for all your operations needs. Thanks to this kind of software, your warehouse team will be automatically informed when an order is made - meaning that you'll get your orders out faster and with increased accuracy.
3. Order shipping
Just like picking and packing in the previous step, order shipping can also be automated. When it comes to shipping, the biggest advantage of automation is increased customer satisfaction. As soon as the order is sent out, your customer will receive an email with tracking information. In this day and age, when customers want to be in the loop 24/7, this is an essential service for an online business to provide.
4. Invoice payment and recording
The order to cash cycle doesn't end when the seller receives the money. In fact, the customer will usually make payment at the very beginning of it - that is, when the order is placed. Once this is done, the customer - or the services of their preferred payment option such as PayPal or their bank - will provide you with an invoice. This invoice must be recorded in the general ledger by your accounts team - but first, they need to check that the paid amount is correct.
Once your accounts team green-lights the received invoice, the OTC cycle comes to an end.
