Order to Cash: Finding the Bottlenecks in Wholesale Distribution
Where the order-to-cash cycle stalls in distribution businesses: credit holds, backorders, picking queues, invoicing lag, and collections, and how to measure each stage honestly.
What you'll learn
- The six stages of order to cash and their typical stall points
- How to measure stage time from data you already have
- Credit and backorder policies that stop bleeding sales
- Why invoicing lag is the cheapest fix in the chain
Cash does not get slow all at once. It gets slow one stage at a time, and each stage has a different owner.
What's inside
Order to cash is a relay: entry, credit, fulfillment, shipping, invoicing, collection. The baton gets dropped between stages, not within them, and every dropped day is working capital you finance.
The useful exercise is measuring each stage separately, because the fix for a credit bottleneck has nothing in common with the fix for a picking backlog.
- 1
The six stages and where they stall
Order entry: re-keyed emails and faxes, pricing exceptions waiting on approval
- 2
Measure before you fix
Your system already timestamps most of the chain: order created, released, picked, shipped, invoiced, paid. Pull ninety days of orders and compute the median and the tail for each gap. The tail is where the money is: a median of one day with a tail of nine means a process that works until it does not.
- 3
Two policy fixes worth the argument
Credit: auto-release orders under a threshold for customers in good standing. Reserve human review for genuine risk, not ritual.
- 4
Invoicing lag: the cheapest fix
Every day between shipment and invoice is a free loan to your customer, and it is usually a systems artifact: billing waits for signed paperwork, or a batch job, or a person to assemble the bill.
Keep exploring Distribution & Wholesale.
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