Order-to-Cash Business Process
An Order-to-Cash Business Process is a business process for managing (receiving and processing) customer sales (whose input is an order and whose output is an invoice).
- AKA: O2C, OTC.
- Context:
- Counter-Example(s):
- See: Business Process, Business-to-Business, Business-to-Consumer, Enterprise Resource Planning, Business Model, Shipping, Revenue Recognition.
References
2015
- (Wikipedia, 2015) ⇒ http://en.wikipedia.org/wiki/order_to_cash Retrieved:2015-7-12.
- "Order to cash" (O2C or OTC) normally refers to the business process for receiving and processing customer sales. It follows "Opportunity to Order" and covers business-to-business (B2B) and business-to-consumer (B2C) sales. The term is most prominent in the design and improvement of Enterprise Resource Planning (ERP) systems such as SAP, Oracle and NetSuite.
In many 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 sales person. 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 (subject to “Revenue Recognition” 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 process (inquiries, requests and complaints).
If we consider the ERP system flow, this is typically categorized into the following eight sub-processes:
- Customer presence
- Order entry (creation of order / booking of order)
- Order fulfillment (physical & digital fulfillment)
- Distribution
- Invoicing.
- Customer payments / collection
- Cash Application
- Deductions (If invoice Short Paid by Customer).
- Collection
- "Order to cash" (O2C or OTC) normally refers to the business process for receiving and processing customer sales. It follows "Opportunity to Order" and covers business-to-business (B2B) and business-to-consumer (B2C) sales. The term is most prominent in the design and improvement of Enterprise Resource Planning (ERP) systems such as SAP, Oracle and NetSuite.
2020
- (Wikipedia, 2020) ⇒ https://en.wikipedia.org/wiki/order_to_cash Retrieved:2020-8-11.
- Order to cash (OTC or O2C) normally refers to one of the top-level (context level) business processes for receiving and processing customer orders. Other top-level business processes include "Marketing to Lead", "Opportunity to Order", “Procure-to-pay” (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, aligning enterprise architectures and IT solutions as well as "blueprinting" as part of Enterprise Resource Planning (ERP) systems.
In many 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 sales person. 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 (subject to “Revenue Recognition” 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 and Field Service and Repair process (inquiries, requests and complaints).
- Order to cash (OTC or O2C) normally refers to one of the top-level (context level) business processes for receiving and processing customer orders. Other top-level business processes include "Marketing to Lead", "Opportunity to Order", “Procure-to-pay” (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.