Order Processing
Managing the order-to-cash cycle.
Workflow
- 01Order Receipt
- 02Order Confirmation
- 03Picking & Packing
- 04Shipping
Data in and out
- IN Customer orders from Sales Force Automation · continuousWithout it: Orders are rekeyed and differ from what was agreed.
- OUT Delivery confirmation to Accounts Receivable · continuousWithout it: Delivered goods are never invoiced.
If you change this
It implies 6 topics across 3 modules, including Customer Relationship Management and Financial Accounting which you might not expect.
See the path ahead →Why it matters
Order processing is where a promise made by sales becomes an obligation carried by operations. The finance consequences are immediate: an order that cannot be fulfilled is deferred revenue, and an order fulfilled but not confirmed is revenue nobody has invoiced.
- It gates revenue: Nothing bills until delivery is confirmed.
- It carries the promise: The date given at quoting is honoured or broken here.
- It feeds the receivable: Order accuracy determines invoice accuracy, and invoice accuracy determines whether a customer pays on time or disputes.
The workflow
- 01
Order receipt
The accepted quote or customer instruction enters as an order — converted, not rekeyed.
- 02
Order confirmation
Availability and credit are checked, and a promise date is confirmed to the customer.
- 03
Allocation
Stock or capacity is reserved against the order so it cannot be committed twice.
- 04
Picking and packing
The order is assembled and readied.
- 05
Shipping and delivery
Goods move, tracked, until receipt is confirmed.
- 06
Delivery confirmation
Proof of delivery is captured — the event that makes the order billable.
Bill from the delivery, not from the order. Billing the order is how organisations invoice for what was short-shipped, and the credit note costs more to process than the original invoice earned.
What you need in place
- Order conversion: A system path from accepted quote to order with no manual re-entry. Any rekeying is a defect regardless of how careful the person is.
- Available-to-promise: A real availability check behind the promise date, or the date is a guess that becomes a service failure.
- Credit check: Customer credit assessed before acceptance, not after delivery.
- Allocation rules: Who gets the stock when there is not enough, decided by policy rather than by whoever calls.
- Backorder handling: A defined path for orders that cannot be met in full.
- Proof of delivery: Captured in a form that triggers billing automatically.
Questions to ask
01Conversion
Does an accepted quote become an order without anyone retyping it?
Rekeying introduces a variance between what the customer agreed and what the business will deliver.
02Promise dates
What is behind the date we give the customer?
An availability check, or optimism. Only one of them survives contact with the warehouse.
03Short shipment
What happens when we deliver part of an order?
Partial billing and backorder handling need to exist before the first one occurs.
04Billing trigger
What event causes an invoice?
Delivery confirmation. If it is order entry, expect credit notes.
05Returns
How does a return reverse the revenue and the stock?
Reverse logistics quietly erodes reported margin when it is handled manually.
Metrics and KPIs to track
On-time in-full (OTIF)
Orders delivered complete by the promised date.
Order cycle time
Elapsed time from order entry to delivery.
Delivered not invoiced
Value delivered but not yet billed, and its age.
Order accuracy
Orders fulfilled without amendment to what was accepted.
Credit note rate
Credit notes as a share of invoices, split by cause.
Backorder value
Value of orders waiting on stock or capacity.
Alongside this