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 top-level, or context-level, business process for receiving and processing customer orders and revenue recognition. The O2C cycle starts when a customer makes a purchase and runs through the companys entire order processing system. The cycle consists of multiple sub-processes around the following steps:
- A customer order is documented.
- The order is fulfilled or the service is scheduled.
- The order is shipped to the customer or the service is performed.
- An invoice is created and sent to the customer by accounts receivable.
- The customer sends payment that is collected by the company.
A streamlined, automated O2C cycle can deliver a range of benefits, including better cash flow, happier customers, and improved operations. The O2C cycle is important for businesses to optimize in order to maintain smooth operations, and activities within O2C can impact supply chain management, inventory management, and required labor. Additionally, a companys cash inflow and working capital is determined by O2C functions, and a delay in invoicing or payment collection can halt any business processes that require spending profit, such as payroll.
