OTC: Order to Cash/ Order to Cash (O2C) or Collect to Cash (C2C)


The Order to Cash process in SAP, also known as O2C cycle in SAP, or Collect to Cash (C2C), defines the entire lifecycle of the customer order processing paradigm, right from the initial order placed, to the ultimate receipt of the payment, and its application in account receivables. The O2C cycle in SAP FICO consists of all these end-to-end processes and functional areas which ensure efficient order processing, delivery, invoicing, and payment collection. Post these processes as well, activity data recorded throughout the O2C process in SAP must be analyzed extensively to help the management identify opportunities for process improvement, streamlining, or optimization.

The order to cash cycle in SAP involves all the steps and functional areas required to ensure efficient order processing, delivery, invoicing, and the final collection of payment. An optimally functioning O2C in SAP ensures an accurate cash flow and drives return and profitability, reducing intermittent delays in the entire process cycle. 

C2C SAP Collect to Cash or Order to Cash (O2C) or Revenue Cycle Management (RCM) is key to ensuring optimal cash flow and payment collection, thereby positively impacting the financial profitability and stability of any business. Through efficient management of the order to cash process in SAP, companies can maximize their revenue generation, effectively reduce the days’ sales outstanding (DSO) numbers, minimize bad debts, and enhance customer experience and satisfaction levels. Effective process controls, automation, and digital accounting (through digital invoicing and shipping management) can thus go a long way in streamlining and improving the overall efficiency of the C2C SAP ecosystem.

What is Order to Cash in SAP?

The SAP order to cash process can be explained through the following steps:

  1. Order Management – Sales Order Creation: The first step of the O2C cycle in SAP FICO is order management, starting as soon as the customer places an order. A sales order is then created in the automated SAP Sales and Distribution (SD) system, capturing all essential details of the customer, products or services ordered, order quantity, pricing, delivery date, and payment terms & conditions, with relevant notifications sent to all relevant departments.
  2. Credit Management – Validation & Availability check: The order to cash SAP system then performs a validation & availability check to verify if the requested products are in stock and can be delivered within the requested timelines, considering current stock levels, open sales orders, and production or procurement lead times. In cases of applicable credit availability, first-time customers are automatically routed through a credit approval process once the order is placed. Automated software manages simple cases for approvals or denials, and finance personnel is looped in for more complex cases requiring thorough scrutiny.
  3. Order Fulfillment: Once the sales order is confirmed, the delivery process begins. In SAP SD, a digital delivery document is created, specifying the products, quantities, and delivery details. This document is used to assemble, pack, ship, and deliver the products to the customer. Automated inventory management software that tracks inventory levels in real-time is an important component of the order fulfillment process. In case an out-of-stock order makes it to fulfillment, it must be called out immediately, the customer alerted, and the order canceled, to avoid subsequent billing issues.
  4. Order Shipping: The shipping and delivery part of the SAP order to cash process needs to be regularly audited to ensure that it adheres to acceptable quality and performance standards. All details from the order and fulfillment process should be regularly updated so that the shipping & delivery team can effectively align shipments around carrier pickup schedules and deliver customer orders on time.
  5. Customer Invoicing: After the delivery is completed, a corresponding invoice is generated based on the delivery document in the SAP SD system and is sent to the customer for payment. This invoice captures the customer billing details, including pricing, discounts, taxes, and any additional charges. When timely and accurate invoices are sent out as per schedule, cash inflows can be forecast, and expenses planned accordingly.
  6. Accounts Receivable: The invoiced amount is then posted in the SAP Financial Accounting (FI) module, i.e., in the accounts receivable sub-ledger. The customer’s open items are updated, displaying the current outstanding invoice amount. Process accounting systems zero in on pending invoices before they cross their due dates, and reviewers try to scrutinize instances of delayed payments. When errors are detected, the accounts receivables team must quickly study the data and determine where the information gap occurred, sending out a revised invoice wherever necessary.
  7. Payment Collections: As the customer makes invoice payments, they are recorded in the SAP FI module against the appropriate customer account. The open items are then cleared and closed, indicating that the payment has been received. In case an invoice payment exceeds its due date, the customer’s account is called out, and their credit capacity suspended till the dues are paid. Whenever they try to place another order, the automated system alerts them that the overdue payment needs to be cleared first before they can initiate their next purchase.
  8. Reporting and Data Management: Throughout the order to cash process in SAP, customer credit limits and payment terms & conditions can be constantly monitored and supervised. Credit checks are also performed periodically during order processing to make sure that the customer has an adequate credit balance to initiate the order. Order to cash SAP provides various reporting and analytical tools to monitor and analyze the order to cash cycle in SAP in real-time. Key performance indicators (KPIs) such as order cycle time, order backlog, delivery performance, and accounts receivable timelines can be tracked and analyzed to measure process efficiency, and agility and identify potential improvement areas.

Thus, this O2C cycle in SAP provides extensive process functionalities to streamline and automate the entire O2C process, enabling businesses to efficiently manage and control customer orders, deliveries, invoices, and the payments system.

What is order to cash in SAP? The entire O2C cycle in the SAP FICO process framework can also be shown in the below diagram, through the following stages:

OTC : Order to Cash/ Order to Cash (O2C) or collect to cash (C2C)

How will BPX help implement the Order to Cash cycle in SAP?

BPX can help to successfully orchestrate the entire O2C process in SAP, expertly planning and executing each stage, with all the key steps in this implementation journey explained below:

1) As-Is Process:

  • Identify, record, and establish the current maturity state of the SAP order to cash process in your company.
  • Make a list of all the SOPs (Standard Operating Procedures) involved in each stage of the process, including order processing, delivery, invoicing, and payment collection.
  • Document or record any pain points, challenges, issues, inefficiencies, or gaps in the current order to cash SAP process which could be possibly improved upon or rectified.

2)Business Blueprint (Fit-Gap & To-be):

  • Conduct interactive workshops with key business stakeholders to create a mutually agreeable definition of the “To-Be” O2C cycle in SAP.
  • Perform a fit-gap analysis to identify possible gaps and solution bridges between the current “As-Is” process and the desired “To-Be” process.
  • Document the business requirements, process flows, and functional specifications.
  • Finalize the master plan and template that lays down the scope, configuration, and customization required for successful implementation.

3)Master Data Migration/Item Master Configuration:

  • Create the master data migration plan, which includes data extraction, data cleaning, and data validation.
  • Migrate and upload relevant master data details, i.e., customer master data, material master data, pricing, and payment terms & conditions.
  • Configure the item master settings, consisting of pricing, discounts, tax codes, and inventory management.

4)System Configuration/Realization:

  • Configure the system based on the approved business plan and functional requirements.
  • Customize SAP modules, like the Sales and Distribution (SD), Financial Accounting (FI), and Credit Management modules, as per business requirements.
  • Configure and define order types, item categories, pricing processes, delivery and billing document types, credit limits, and payment terms and conditions to leave no room for ambiguity.
  • Integrate the various SAP modules in the O2C in SAP and define the data flows between them.

5)User Acceptance Testing (UAT):

  • Develop test scripts based on the various business scenarios and process flows.
  • Carry out UAT to validate the configured O2C cycle in SAP against the defined test cases.
  • Take care of issues, bugs, or discrepancies identified during UAT.
  • Obtain a sign-off from key users and stakeholders.

6)Go-Live Preparation:

  • Incorporate feedback and modifications from the UAT phase into the O2C process in SAP.
  • Conduct end-user training to familiarize them with the new system and processes.
  • Prepare data migration plans to transfer historical transactional data if required.
  • Develop a strategic transition plan to transfer data and processes from the old legacy system to the new O2C cycle in SAP FICO.
  • Perform system performance and stability tests in preparation for the final go-live.


  • Execute the system, process, and data transition plan, and migrate to the new C2C SAP system.
  • Activate and trigger the O2C in SAP and C2C SAP processes in the production environment.
  • Monitor the order to cash SAP closely during the initial days of go-live, immediately resolving any issues or snags that may arise.
  • Smooth planning and execution of customer orders, deliveries, invoicing, and payment collection.

8)After Go-Live Support:

  • Provide ongoing support to end-users for any system-related queries or issues.
  • Continuously track and optimize the O2C or C2C processes to improve overall efficiency and address any gaps or issues.
  • Conduct post-implementation reviews and take continuous feedback for further enhancements, staying agile as a part of the iterative development process.
  • Perform regular system maintenance, updates, and patches to keep the O2C in SAP up to date and performing optimally.

Thus, it is the constant endeavor of BPX to help businesses successfully manage and optimize their end-to-end order to cash cycle in SAP. BPX helps enterprises deliver value to their customers, maximizing their overall customer experience, and enabling them to receive timely payment for their services. This then becomes a win-win scenario for both entities.

About BPX

Logistics Execution (LE) - How will BPX help Implement

Based out of Pune India, Business Process Experts (BPX) is one of India’s leading process management consultants offering focused solutions for businesses looking to optimize their order to cash process in SAP. BPX was established in 2012, and since then, it has quickly risen to become a game changer in the SAP process solutions landscape. The company provides industry-ready process blueprints for various businesses and sectors, like engineering, automobiles, banks, chemicals, garments and apparel, retail, manufacturing, hospitality, pharmaceuticals, mining, food processing, ITeS, and many others.

Driven by an expert team of engineers, management graduates, finance professionals & SAP process consultants and outsourcers, BPX and its renowned sister organizations like YRC have been strategic and transformational partners for top-tier clients for several years running, expertly handholding clients to successfully optimize their SAP order to cash process. As your trusted SAP process consultant, BPX can help you to follow the industry’s best practices, thereby ensuring a successful implementation. All BPX consultants have rich SAP implementation experience. They will analyze your organization’s O2C or C2C cycle, and tailor your process implementation, in keeping with your specific process requirements, pain points, challenges, issues, and scope.

So, if you are a business owner or head honcho looking to implement or optimize your organization’s O2C process in SAP, your search ends here, please connect with BPX right away. We will understand and analyze your exact business requirements and customize your SAP systems and processes, helping you to establish an agile, digital process mechanism that will eliminate delays, errors, and glitches, helping your business to scale up and grow exponentially, always staying well ahead of your competition!


Order-to-cash, also known as OTC or O2C, or Collect to Cash (C2C), can be defined as the entire end-to-end cycle involved in processing customer orders, starting from the time a customer places the order to when payment is collected, and applied to the accounts receivables. The O2C process in SAP encompasses different phases, such as order and credit management, order cycle completion and delivery, invoicing, payment collection and reporting, data management and analytics. An efficient, streamlined O2C cycle is key to maintaining a healthy cash flow, reducing the time between receiving orders and getting paid, and also minimizing potential delays in receiving customer payments.

To activate cash management for sales orders in SAP, we should configure all the settings for cash management and sales order processing. Specific steps and options would differ based on your SAP system version and configuration. The key steps in the activation process are as follows:

1) Set Up Cash Management in SAP: First and foremost, cash management must be properly set up in the SAP system. 

2)Activate Cash Management settings: To integrate cash management with sales orders, we need to activate access. We then customize by executing transaction code SPRO (SAP Project Reference Object) and navigate to the following path: SAP Customizing Implementation Guide – Sales and Distribution – Basic Functions – Cash Management. The integration can be then activated by selecting the relevant options.

3)Define Payment Methods in the settings: Here, we must follow this path: SAP Customizing Implementation Guide – Sales and Distribution – Basic Functions – Payment Cards – Payment Cards in the Sales Order. Thus, the appropriate payment methods have to be selected based on business needs.

4)Assign Payment Methods to Sales Document Types: After defining the payment methods, we have to assign them to the respective sales document. After executing transaction code SPRO, we go to customization and follow the path: SAP Customizing Implementation Guide – Sales and Distribution – Sales – Sales Documents – Sales Document Header – Define Sales Document Types. Then we can assign the appropriate payment methods to the relevant document types.

5) Configure & Activate Cash Management Data in Sales Order: Here, we configure the settings to capture cash management data in sales orders, with the path being: SAP Customizing Implementation Guide – Sales and Distribution – Basic Functions – Cash Management – Sales Orders. We then define the relevant parameters such as cash management groups, payment methods, and other settings based on business requirements. For activating cash management functions, we enable the required functions such as cash management for sales orders, credit management, and payment card authorization.

6) Save and Test: After completing the above configurations, we save our settings. We then test-run the cash management consolidation with sales orders by creating a typical sales order and observing how the entire cash management data is captured and processed.

Order to cash(O2C) and procure to pay(P2P) are two complementary but different business processes. While order to cash consists of all the processes related to a sale, procure to pay includes all the business processes associated with procurement from suppliers (i.e., in terms of the purchase requisition, request for quotation, and the purchase order). Thus, the key difference between procure to pay and order to cash is that O2C is for sales orders, while P2P is for sourcing and procurement, from a purchase requisition perspective.

The key advantages or benefits of the O2C (Order to Cash) process is as follows:

  1. Improved operational efficiency through a streamlined and structured process framework
  2. Increased order accuracy in the automated order creation and fulfillment processes 
  3. Greater customer satisfaction and experience through more efficient order fulfillment and delivery. 
  4. Enhanced visibility and control, and greater operational efficiency with regard to order status, inventory levels, and delivery schedules. 
  5. Efficient order tracking at every stage of the O2C process.
  6. Financial management modules alignment, for accounts receivables and general ledger. 
  7. Real-time data-driven decision-making, through reports and analytics.
  8. Scalability, adaptability, flexibility, and agility in the entire O2C process cycle.

Let’s Talk!