The order-to-cash (OTC or O2C) process contains everything from the order, packaging, and delivery of goods and services to depositing the money in the bank.
Order to cash (OTC or O2C) is a set of business processes that involve receiving and fulfilling customer requests for goods or services.
It is a business process for receiving and processing customer sales. It contains the whole process ranging from customer purchase order to Invoice.
It covers business-to-business (B2B) and business-to-consumer (B2C) sales.
In business models, a contractual relationship is established first via a Contract or Subscription.
Orders are then received via different sales channels, such as phone, fax, email, internet, or salesperson. The contractual relationship is confirmed and the Orders are fulfilled through shipping and
logistics. On completion of key events, an invoice is generated and booked as Sales. If payment has not already been received, the debt is recorded. Order to Cash is completed by the Customer Care process (inquiries, requests, and complaints).
Order to cash cycle consists of multiple sub-processes including:
It can also be defined as:
Order to cash refers to the business process in which customer sales orders are accepted by a
manufacture, the fulfillment of the order followed by shipping and receiving followed by the generating of
an invoice and collecting payment for that invoice.
Buyer orders products from Seller. The seller accepts Orders and confirms order fulfillment. Seller sends
Advanced Shipment Notification to the buyer as soon as products leave the Seller. Seller sends Invoice to Buyer.
Buyer orders products from Seller, Buyer may or may not place a change order. Seller may confirm all line items in the Purchase Order Confirmation or uses the Purchase Order Update to confirm pending line items.
Seller will send out Advanced Shipment Notification to Buyer. Seller will send out the Invoice to the Buyer.
The buyer pays the invoice.
The process involves three trading partners, the Buyer, the Seller, and the Logistic Service Provider.