Order to cash (OTC or O2C) normally refers to one of the top-level (context level)

business processes A business process, business method or business function is a collection of related, structured activities or tasks by people or equipment in which a specific sequence produces a service or product (serves a particular business goal) for a parti ...

for receiving and processing customer orders and revenue recognition. Other top-level business processes include "Marketing to Lead", "Opportunity to Order", "

Procure-to-Pay Procure-to-pay (also known as Purchase to Pay (P2P)) is a term used in the software industry to designate a specific subdivision of the procurement process. The P2P systems enable the integration of the purchasing department with the accounts p ...

" (P2P), "Issue to Complete" (for manufacturing production) "Hire to Retire", "Concept to Launch" (for innovation and new product development), "Sustain and Retain" (for customer service and support) and " Record to Report" for general ledger processes. Recently, the concept of order-to-cash has been extended to "Lead to Cash" by many software providers to include also the marketing and pre-sales process steps. The context level processes are utilized in a number of ways by businesses such as

business process reengineering Business process re-engineering (BPR) is a business management strategy originally pioneered in the early 1990s, focusing on the analysis and design of workflows and business processes within an organization. BPR aims to help organizations fundam ...

, aligning enterprise architectures and IT solutions as well as "blueprinting" as part of

Enterprise Resource Planning Enterprise resource planning (ERP) is the integrated management of main business processes, often in real time and mediated by software and technology. ERP is usually referred to as a category of Business management tools, business management ...

(ERP) systems. In many

business model A business model describes how an organization creates, delivers, and captures value,''Business Model Generation'', Alexander Osterwalder, Yves Pigneur, Alan Smith, and 470 practitioners from 45 countries, self-published, 2010 in economic, social, ...

s, a contractual relationship is established first via a Contract or Subscription. Orders are then received via different

sales Sales are activities related to selling or the number of goods sold in a given targeted time period. The delivery of a service for a cost is also considered a sale. The seller, or the provider of the goods or services, completes a sale in r ...

channels, such as phone, fax, email, internet or salesperson. The contractual relationship is confirmed, and the orders are fulfilled through

shipping Freight transport, also referred as ''Freight Forwarding'', is the physical process of transporting Commodity, commodities and merchandise goods and cargo. The term shipping originally referred to transport by sea but in American English, it h ...

and

logistics Logistics is generally the detailed organization and implementation of a complex operation. In a general business sense, logistics manages the flow of goods between the point of origin and the point of consumption to meet the requirements of ...

. On completion of key events, an invoice is generated and booked as Sales (subject to "

Revenue Recognition The revenue recognition principle is a cornerstone of accrual accounting together with the matching principle. They both determine the accounting period in which revenues and expenses are recognized. According to the principle, revenues are recog ...

" requirements). If payment has not already been received, the debt is recorded and pursued through dunning cycles until the funds are received. Order to Cash is completed by the

Customer Care Customer service is the assistance and advice provided by a company to those people who buy or use its products or services. Each industry requires different levels of customer service, but in the end, the idea of a well-performed service is that ...

and Field Service and Repair process (inquiries, requests and complaints).

Order to cash in ERP software

All ERP systems provide order to cash processes. Examples are

Microsoft Dynamics 365 Microsoft Dynamics 365 is a product line of enterprise resource planning (ERP) and customer relationship management (CRM) intelligent business applications announced by Microsoft in July 2016 and released on November 1, 2016. Feature applicat ...

, Oracle Cloud ERP, Oracle NetSuite, SAP ERP SD,

SAP Business ByDesign SAP Business ByDesign (ByD) is a cloud enterprise resource planning software (Cloud ERP) that is sold and operated as software as a service by SAP SE. It is designed for small and medium-sized enterprises. The software is designed to provide busin ...

or Workday. Typical sub-processes and variants in those ERP systems are: * Customer master data entry *

Lead management Lead management is a set of methodologies, systems, and practices designed to generate new potential business clientele, generally operated through a variety of marketing campaigns or programs. Lead management facilitates a business's connection bet ...

opportunity management Opportunity management (OM) has been defined as "a process to identify business and community development opportunities that could be implemented to sustain or improve the local economy". Opportunity management is a collaborative approach for ...

and quotation management * Order and contract entry (creation, availability check and booking) *

Order fulfillment Order fulfillment (in British English: order fulfilment) is in the most general sense the complete process from point of sales inquiry to delivery of a product to the customer. Sometimes, it describes the more narrow act of distribution or the ...

(physical and digital fulfillment) * Distribution * Invoicing * Customer

payment A payment is the voluntary tender of money or its equivalent or of things of value by one party (such as a person or company) to another in exchange for goods, or services provided by them, or to fulfill a legal obligation. The party making the p ...

s / collection * Cash application * Deductions (if invoice short paid by customer) * Collections

Difference between quote to cash and order to cash

Quote to Cash (Q2C) refers to all the business processes involved in O2C, customer purchase intent, configuration pricing quoting, and contract lifecycle management.

References

{{Reflist Enterprise resource planning terminology Supply chain management Customer relationship management

Order to cash in ERP software

Difference between quote to cash and order to cash

See also

References