Many companies are missing opportunities in terms of liquidity, costs, and supply chain collaboration due to inefficiencies in their Order-to-Cash (O2C) processes. This is highlighted in the “Order to Cash Monitor 2024 | Diesis,” published by Windesheim University of Applied Sciences and Diesis. The O2C process forms a crucial link in the supply chain, as it directly impacts customer-supplier relationships and the financial health of all parties involved.

The Impact of Long Lead Times

The Order-to-Cash process encompasses all steps from the moment a customer places an order to the final payment. This means it’s not only about the speed of processing and delivering orders but also the accuracy of delivery, invoicing, and the time needed to collect payments. The Order to Cash Monitor 2024 shows that the average lead time in the Netherlands is 51 days. In cases of disputes, such as invoice conflicts, this extends to 66 days. Many delays occur throughout the process, limiting companies’ liquidity, which increases their reliance on external financing and reduces their flexibility to invest.

These delays often happen in less obvious areas. For instance, the average invoicing time is 8.6 days. Reducing this lead time requires companies to streamline and, where necessary, automate processes like invoicing and payments.

Order-to-Cash as an Integrated Process

Many companies still view their Order-to-Cash process as a collection of separate parts, leading to significant inefficiencies. Problems in order processing can, for example, result in delivery and invoicing errors, causing payment delays. Moreover, disputes arising from these errors are a major frustration for customers. When sales, operations, and finance departments align their activities more effectively across the different parts of the process, errors and delays can be reduced.

E-Invoicing and Automation

An important finding from the monitor is the low adoption of e-invoicing, especially among small and medium-sized enterprises (SMEs). Only 15.3% of Dutch companies use e-invoicing, despite its many advantages. For SMEs, this percentage is just 9.89%. E-invoicing allows companies to send invoices faster and shorten approval times on the customer’s end. It also reduces the number of disputes by decreasing errors in invoice processing.

Pressure to implement e-invoicing is increasing as the European Commission introduces new regulations through the “VAT in the Digital Age” proposal. Companies that switch to e-invoicing now will be better prepared for these changes and can adapt more quickly to new market developments.
Another focus area is automatic reconciliation—matching payments to the corresponding invoices. At 53% of companies, more than half of the invoices are not reconciled automatically.

The Importance of Monitoring and Collaboration

The Order to Cash Monitor 2024 reveals that many companies lack sufficient insight into their O2C processes. Only 7% of companies measure the total lead time of their process, and only 3% monitor the development of their working capital. This lack of insight means inefficiencies often go unnoticed, while measuring and monitoring the process could enable companies to implement improvements and evaluate their impact.

For supply chain or operational employees, this presents an opportunity. These departments hold a wealth of expertise in streamlining processes, frequently applied to optimizing goods flows, but still underutilized in optimizing cash flows within O2C processes. The potential is significant, with cost savings possible by reducing order and invoice processing times, and benefits in customer relations through fewer disputes.

For SMEs in particular, there is also substantial potential to improve liquidity, providing financial breathing room in times of limited access to bank financing. If the total turnover of SMEs in the Netherlands were paid just five days earlier, it would free up more than 14 billion euros in liquidity for this group of companies.

Learn more about the O2C process at our event in Utrecht on October 24th: https://scfcommunity.org/event/scf-corporate-event-netherlands-2/