What is invoice to cash process?
The Invoice-to-Cash process describes the path from invoice to collection. It consists of a series of steps that take place after an invoice has been issued by your organisation, until the final payment is received, including:
- Issuing the invoice ;
- Dunning ;
- Collection ;
- Security standards ;
- Recording in the accounts ;
- Reconciliation;
- Management of disputes and litigation.
The "invoice to collection" cycle is the process by which you issue an invoice, send it to the customer, collect it, and then send it back to accounting so that it can be reconciled with its original and changes made. It includes reconciliation, account maintenance, payment and collection, with the aim of maximising the recovery of unpaid invoices:
Why focus on the Invoice to Cash process?
Late payments, overdue invoices, lack of cash: accounts receivable often have a serious impact on a company's cash flow.
The management of accounts receivable is a delicate task, which requires both tact and firmness: the objective for the company is to collect its accounts receivable without damaging the commercial relationship. To do this, an intelligent reminder strategy is necessary, but the company can (and must) also rely on the many technological innovations offered by SaaS and Cloud solutions.
Controlling the invoice-to-cash cycle means controlling the collection of receivables and reducing the number of unpaid invoices. That's why it's so important for small businesses to monitor their accounts receivable, i.e. the total amount owed by customers, as well as their accounts payable, i.e. what they owe to suppliers. For companies dealing with a large number of suppliers, such as franchises and chains, I2C offers a scalable and flexible solution for large volumes of invoices.
How to set up an invoice to cash process?
The first step in controlling collection is to dematerialise the accounts receivable process, i.e. to set up an invoice to cash automation software that allows you to issue, collect, process and collect your customer invoices as soon as the service/delivery is completed. In other words, what you need is a system that allows you to :
- Issue an invoice at any time without disrupting business operations.
- Have this invoice processed by the accounting software and sent electronically to your customers
- Receive the customer payment and deposit it automatically into your bank account.
- Performing bank reconciliation and accounting reconciliation.
The business impact of automated payment management
1. Automate your reminders and payment follow-up
Customer relations are precious. This is why, in the context of reminders for unpaid invoices, we favour amicable solutions (phone calls, letters, text messages, mails, etc.).
Managing reminders is a time-consuming task with no real added value. But this is nothing compared to the burden that late payments represent for the treasury: overdrafts, lack of liquidity, obstacles to the development of the company, etc. Not to mention the human and material resources mobilised for debt collection, which could be used for other more productive projects.
If you can dematerialize your invoices in a few clicks, why not do the same with your dunning processes?
2. Analysing the customer profile with the KYC procedure
KYC (Know Your Customer) is a procedure imposed on all players in the financial sector. This process refers to the protocol for verifying the identity of the customer, whether a natural person or a legal entity. The same process applies to suppliers: this is called KYS (Know Your Suppliers).
Libeo acquires TrackPay, allowing their customers to better track their cash inflow
3. Streamline your payment process
The collection process is one of the key parts of the invoice life cycle. It allows you to get invoices paid in record time and to manage customer return.
It is therefore important to have a system that works and keeps your business secure. Your payment receipt system should be integrated with your accounting software or ERP system so that it can automatically update your accounts receivable and reduce manual entry errors.
The most common problem with invoicing is not following up on customers who do not pay on time. If you do it manually, it is easy to miss important information or lose track of who owes what and when they are supposed to pay.
Automatically send reminders after payment due dates and keep track of which customers owe what - and how much - so you can follow up quickly if necessary. If you are using an automated system with this functionality, that's fine! If not, we recommend you click on the orange button below!
From invoice to cash in a snap
Free yourself from your customer reminders: Libeo takes care of the follow-up of your invoices and speeds up their collection.
Book a demoFAQ
Can an invoice be paid in cash?
Small businesses dealing with the public (B2C) can accept cash payments, but for security reasons most business to business invoices can only be paid with online payment methods.
What is billing in order to cash?
The order-to-cash process includes all steps from when a customer places an order to the business being paid for its product or service. There are several steps involved in the process of receiving and processing orders. They include order management and order fulfillment, credit management and invoicing, and finally payment collection.
What is the OTC cycle?
The order-to-cash cycle, also known as the O2C or OTC process, refers to the steps a company takes from receiving customer orders through to completing those orders. This means handling the shipping and invoicing, as well as collecting payments.
