Order to Cash (O2C) – End-to-End Process

 Order to Cash (O2C) – End-to-End Process

Order to Cash (O2C) is a critical business process that covers the entire customer lifecycle—from receiving an order to collecting payment and closing the books. A strong O2C process ensures smooth operations, healthy cash flow, and customer satisfaction.

📌 Key Steps in the O2C Process:

1️⃣ Order Management
• Customer places an order
• Sales order is created in the ERP system
• Order details (price, quantity, delivery date) are validated

2️⃣ Credit Management
• Customer credit limit and payment history are checked
• Order is approved or put on credit hold if limits are exceeded

3️⃣ Order Fulfillment / Delivery
• Goods are picked, packed, and shipped
• Delivery confirmation or Proof of Delivery (POD) is generated

4️⃣ Billing / Invoicing
• Invoice is created based on shipped goods or services delivered
• Invoice is sent to the customer (email / EDI / portal)

5️⃣ Accounts Receivable (AR)
• Invoice is posted to customer account
• Due date and payment terms are tracked

6️⃣ Cash Application
• Customer makes payment (NEFT, RTGS, cheque, online transfer)
• Payment is matched with open invoices
• Differences are resolved (short payment / deductions)

7️⃣ Dispute & Deduction Management
• Customer disputes or deductions are investigated
• Adjustments, credit notes, or re-billing are processed

8️⃣ Collections & Reporting
• Follow-ups on overdue invoices
• Aging analysis and DSO monitoring
• Month-end closing and reporting

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🎯 Why O2C Matters:

✔ Improves cash flow
✔ Reduces revenue leakage
✔ Enhances customer experience
✔ Ensures accurate financial reporting

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📢 A well-managed O2C process connects Sales, Logistics, Finance, and Customers seamlessly.