Conceptually : Order To Cash Cycle – O2C

“Order to cash” (O2C or OTC) normally refers to the business process for receiving and processing customer sales.

Order to Cash, referred to as O2C or OTC, is the end-to-end business process for receiving and processing customer orders (sales). The Order to Cash process is initiated with the establishment of a new customer. The customer enters an agreement with your company, a sales contract is created and a credit rating is established. Orders are then received from your customer, allowing your business to begin fulfilling the orders, invoicing and collecting cash. Many businesses also save the data from this process and use it to develop analytics to better understand and plan for future fulfillment of their customer’s needs and expectations.

The fulfillment portion of the Order to Cash process is particularly important – this is where order taking meets supply chain delivery. Products ordered by the customer must be physically removed from stock or manufactured, prepared for shipment, and delivered to the customer. Your inventory management, production/operations and logistics functions are key to ensuring that the order can be fulfilled and meet customer needs for on time delivery.

The final steps in the process include invoicing, collections and cash application. Once your customer receives the products ordered and is provided with an invoice or bill, they must then pay for the products they have received. The billing and collections process involves monitoring all inbound invoice payments and working with your customers to collect any payments in arrears.

If we consider the ERP system flow, this is typically categorized into the following eight sub-processes:

  • Customer Entry
  • 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 case in Oracle

  • This cycle starts with the Order Management Module where an order is created with 5 lines. This order is then booked and passed to Pick Release.
  • Pick Release finds and releases the order and creates a move order request. The process of transacting move orders creates a reservation against the source subinventory.
  • Ship confirm is the process of confirming that items have shipped. Shipping Execution confirms that the delivery lines associated with the delivery have shipped.
  • ITS creates a trip and related stops for all eligible deliveries that has not been assigned to a trip.
  • A manual Invoice is created based on the Customer and the items, which are ordered previously.
  • In order to complete the business cycle, these manually created invoices are then moved to the General Ledger Module by way of a Concurrent Program, and finally after a review of these Journal Entries in the General Ledger they are Auto-Posted in the respective accounts, thus ending the complete cycle.

Thanks – Shiv

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