O2C (Order-to-Cash)
The end-to-end sales process from customer order capture to cash collection.
Detailed definition
O2C (Order-to-Cash) is the end-to-end sales process that runs from receiving a customer order to collecting payment. Its typical steps are: quotation and contract, sales order entry, credit/approval checks, preparing and shipping the goods (outbound delivery), billing, collection and accounting reconciliation. The goal is to keep these steps flowing accurately, quickly and traceably, because delays directly affect cash flow. In the SAP world, O2C is run largely through the SD (Sales & Distribution) module and integrates with FI-AR for accounts receivable. Process health is usually measured with KPIs such as DSO (days sales outstanding), order accuracy and invoice error rate. A well-designed O2C process also handles pricing rules, revenue recognition and return/cancellation scenarios clearly. Together with the procurement-side P2P process, O2C forms one of a company's two core value streams, and it typically runs on an ERP.
Related terms
ERP (Enterprise Resource Planning)
Integrated enterprise software that unifies core business processes — finance, procurement, manufacturing, sales and HR — on a single data model.
MRP (Material Requirements Planning)
A planning method that automatically proposes purchase and production orders based on production and stock targets.
P2P (Procure-to-Pay)
The end-to-end process from purchase requisition to vendor payment.