A non-posting process, preliminary to the actual financial posting process. These activities do not directly post accounting entries to the General Ledger (GL) or create financial statements. Instead, they gather transaction data and document it for further financial processing like Record to Report (R2R) or Post to Ledger phase. In R2R financial transactions are reviewed, approved and posted to the general ledger which leads to the creation of financial statements.
O2C process is crucial for revenue recognition and cash flow management. Posting of financial entries typically occurs in the subsequent steps of the financial cycle. Primary goal is to ensure that customer orders are processed accurately, on time and with minimal errors, leading to customer satisfaction.
Steps in Order Management are:
- Order Entry: Create sales order by customer.
- Order Validation: Ensure that order meets the criteria like customer credit limits, product availability, etc.
- Order Acceptance: If the order is validated and approved it is accepted and a confirmation is sent to the customer.
- Order Fulfillment: After order acceptance the ordered item is picked, packed and shipped to the correct customer within the time frame.
- Invoicing: Invoices are generated to bill the customer for the products or services provided which indicates the total amount including taxes and shipping charges.
- Payment Processing: Collecting payment from customers, through any means of payment method.
- Order Tracking and Status Updates: Order status is shared with customer through which they can track their orders and receive status updates.
- Returns and Exchanges: Handling returns, exchanges and order adjustments like update the inventory stocks accordingly.
- Customer Communications: From the stage of ordering onwards proper status must be updated and communicate it with the customer. Provide post purchase supports to the customer.
- Reporting and Analyzing: Analyze the orders and proper documentation have to be done which will helps to gain insights into sales trends, order accuracy, and customer behavior to make informed decisions.
An efficient order management system is required for business success, which can impact the customer’s satisfaction and also plays an important role in revenue generation and cash flow, it helps business to maintain accurate records, reduce errors and improve overall operational efficiency.
Steps in Order Fulfillment are:
- Order Receipt: When customer places an order an order receipt is received by business.
- Order Processing: In order processing validate the order details, check for the product availability in warehouse and confirm whether the pricing and shipping information is correct.
- Picking, Packing and Shipping: Locate the product from warehouse and pick the item, pack the item securely and ship to the customer.
- Tracking and Shipment confirmation: Customer is provided with shipment tracking information to track their order status.
- Delivery: The item must be delivered on time, to the customer who had ordered it. The delivery can be physical or digital based on the product or service.
Order fulfillment processes involved in delivering products or services in a timely manner and efficiently to correct customer which is a part of order management.