Order to Cash Process: Steps, Documents and How to Automate It

The order to cash process (O2C) is the sequence of steps a company follows from the moment a customer asks for a price to the moment that customer's payment is applied to the invoice it settles. For a manufacturer or distributor it runs through quoting, sales order entry, credit checking, production or fulfillment, shipment, invoicing, cash application and collections. Each step starts with a document, and each document has to land on the right screen in the ERP before the next step can begin.

This guide walks through the order to cash cycle step by step, names the document that arrives at each stage and where it lands in Epicor Kinetic, and shows where automation applies, what to measure and where the process usually breaks. Its sister cycle on the buying side is procure to pay, which runs from purchase order to supplier payment.

The order to cash steps

1. Quote

A customer sends a request for quote (RFQ) by email, PDF, spreadsheet or a line in a portal. Someone in inside sales or estimating identifies the customer, finds the parts (often listed under the customer's own part numbers), checks units, prices and lead times, and builds a quote in Quote Entry. Quote speed matters because the first credible quote often wins the order.

2. Customer purchase order to sales order

The customer accepts and sends a purchase order. Customer service keys it into Order Entry: customer, ship-to address, the customer's part numbers translated to yours, quantities in the unit the customer ordered, prices, requested dates and releases. This is the step most manufacturers and distributors still do by hand, and the one where errors cost most, because every later step inherits them. Our guide to automating Epicor sales order entry covers it in depth.

3. Credit check

Before the order is released, the customer's open balance and credit limit are checked. In Epicor Kinetic an order that pushes a customer over the limit can be placed on credit hold, and someone in credit or AR decides whether to release it. Slow credit decisions delay shipments that were otherwise ready.

4. Fulfillment or production

Stock orders are allocated, picked and packed from inventory. Make-to-order lines become jobs on the shop floor. The order acknowledgment goes back to the customer with confirmed dates, and changes to the order (quantities, dates, ship-to) arrive as further emails or revised POs that need the same care as the original.

5. Shipment

Goods leave on a packing list and a bill of lading, recorded in Customer Shipment. Some customers send their own shipping instructions or delivery schedules, naming their delivery order numbers and part references rather than your order and line numbers, and each line has to be matched back to the order release it ships against.

6. Invoicing

The shipment is invoiced in AR Invoice Entry, usually from the shipment itself so quantities and prices carry over. Invoices that start outside the shipment (billing produced in another system, credit memos from a dispute, progress or miscellaneous billing) are entered directly. The invoice then goes to the customer by email, portal or EDI.

7. Payment and cash application

The customer pays by ACH, wire, check or card, and a remittance advice arrives separately, often as an email attachment or a bank export. AR applies the payment to the invoices it settles in Cash Receipts Entry. When the remittance is missing or does not match the open invoices, the cash sits unapplied and the customer looks overdue when they are not.

8. Collections and deductions

Past-due invoices are chased with reminders and calls. Short payments are researched: a pricing dispute, a damaged shipment, a promotional allowance or a deduction the customer took without explanation. Each one is either collected, written off or turned into a credit memo.

9. Reporting

Finance closes the loop with the AR aging, DSO and cash forecast. Operations looks at order cycle time and on-time delivery. These reports are only as good as the data keyed at steps 2 through 7.

Step, document and screen at a glance

Where order to cash automation applies

Order to cash automation is a set of tools, each covering part of the cycle. Most companies combine several.

• EDI. For large customers who trade by EDI, purchase orders (850), ship notices (856) and invoices (810) move as structured data. EDI is the right answer where a customer mandates it, but setup is per trading partner, so it rarely reaches the long tail of customers who send PDFs and emails.
• Customer portals and e-commerce. Customers who can be moved onto a portal enter their own orders. That works for repeat catalog orders and much less for engineered products, or for customers who will not change how they buy.
• AI document agents. Agents read the documents that arrive in any format (RFQs, purchase orders, shipping instructions, invoices, remittances) and draft the transaction in the ERP screen it belongs to, for a person to review. This is where Fluent sits. It covers the documents EDI and portals never reach.
• AR automation platforms. Tools such as HighRadius, Billtrust and Versapay focus on the back half of the cycle: invoice delivery and customer payment portals, cash application, collections workflows, credit decisions and deduction management (HighRadius lists a dedicated deductions product). For a finance team whose main problem is collections and cash application at volume, these are purpose-built.
• ERP features. Epicor Kinetic itself handles credit holds, invoicing from shipments, AR aging and dunning letters. Use what the ERP already does before buying around it.

The practical split for most mid-market manufacturers: EDI and portals for the customers who use them, an AR platform if collections and cash application are the bottleneck, and document agents for everything that still arrives as a PDF or an email and gets retyped.

Order to cash metrics

• Days sales outstanding (DSO). Accounts receivable divided by credit sales for the period, multiplied by the number of days in the period. It measures how long, on average, it takes to collect after a sale. Lower is better, but compare against your payment terms: DSO of 45 on net 30 terms is a collections problem; on net 60 it is not.
• Order entry cycle time. Time from the customer's PO arriving to the sales order being entered and acknowledged. It shows how long orders queue in an inbox before anyone works them.
• Order accuracy. Share of orders entered without a correction afterwards: right customer, ship-to, part, quantity, unit and price.
• Perfect order rate. Share of orders delivered complete, on time, undamaged and with correct documentation, including an accurate invoice. Because it multiplies several conditions, it is always lower than any single one of them.
• Unapplied cash. Payments received but not yet matched to invoices, as a total and by age. A rising balance means remittances are not being processed and customers look overdue when they have paid.
• Collection effectiveness index (CEI). Beginning receivables plus credit sales minus ending total receivables, divided by beginning receivables plus credit sales minus ending current receivables, times 100. It measures how much of what was collectible in the period was actually collected; closer to 100 is better.

Other useful measures are quote turnaround time, invoice accuracy (invoices not later credited or reissued) and deductions as a share of revenue.

Common failure points

• Retyping between steps. The same customer part number is keyed in the quote, again in the order and again when a revised PO arrives. Every retype is a chance to introduce an error that surfaces at invoicing or payment.
• Units of measure. A customer orders in cases, you stock in each, the price is per thousand. An order entered in the wrong unit ships the wrong quantity and invoices the wrong amount.
• Price drift from quote to order to invoice. If the order price is not checked against the quote and the invoice against the order, disputes and short payments follow.
• Duplicate purchase orders. A PO sent twice, or re-sent as a revision, gets entered twice and ships twice.
• Remittances that arrive separately from the cash. The bank shows the deposit; the remittance sits in an inbox. Until someone matches them, cash is unapplied and collections may chase a customer who has paid.
• Deductions with no owner. Short payments that no one researches age into write-offs.
• Late invoicing. Every day between shipment and invoice adds a day to DSO.

Where Fluent fits in order to cash

Fluent is AI agents that read business documents and draft the transaction in the ERP for a person to review. It is built around Epicor Kinetic, and five of its ten agents cover order to cash, each named for the Kinetic screen it drafts into:

• Quote Entry. Reads requests for quote in any format and drafts the quote in Quote Entry, with the customer, parts (including the customer's own part numbers), units and revisions resolved against Epicor. Configurable parts are answered in the Epicor product configurator and priced by Epicor.
• Order Entry. Reads customer purchase orders in any format and drafts the sales order, resolving the customer, ship-to, customer part numbers, units and prices, and flagging duplicate POs.
• Customer Shipment. Reads the customer's shipping instructions and drafts the shipment in Customer Shipment, with each line matched to the order release it ships against.
• AR Invoice Entry. Drafts customer invoices and credit memos that start as documents into AR Invoice Entry, with lines, charges and currency as the document states them.
• Cash Receipts Entry. Reads payment orders, checks and bank exports and drafts the receipt in Cash Receipts Entry, applied to the open invoices it settles.

Nothing posts until a person processes the draft. An approval workflow routes each document to the people who sign off on it, with thresholds such as an amount or a price variance deciding who reviews what. Every field read and every decision is recorded on the document. If no customer matches, the document is drafted with a note of what was searched and waits for a person. There are no templates per customer, no field mapping and no model training: behaviour is set with written instructions, and corrections become instructions.

Fluent connects to Epicor Kinetic's REST API from outside, with nothing installed inside Epicor, and works on premise or Epicor-hosted. The same agents are offered for other ERPs, including Prophet 21, SAP Business One, NetSuite, Acumatica and Microsoft Dynamics 365; Epicor Kinetic is where it is deepest.

Where it does not fit: Fluent is not an EDI translator or VAN, not a CPQ, and not a collections or credit platform. If your customers trade by EDI, keep EDI for them. If the bottleneck is dunning, disputes and deduction research at volume, an AR platform is the better fit. Fluent covers the documents that still arrive as PDFs, scans and emails and get keyed by hand.

See it on your own orders

Send a real RFQ, purchase order or remittance and read the draft Fluent produces in Epicor. Start with the order to cash agents, check pricing, or book a demo.