Order to Cash Process Guide

Mastering the Order to Cash Process: Guide to Streamlining Your Business Transactions 

Order to cash process is the bread and butter of the company. Whatever the company earns, it earns and manages through this process. This process is important as it ensures that sales orders are converted into cash on time. 

In this guide we discuss the basics of what is order to cash process, what is its ultimate goal and why it is important for businesses. 

Key Takeaways:

What is Order to Cash Process?

Credit Management

Is Accounts Receivable Part of OTC Process?

What is the Objective/Overall Goal of the OTC Process?

What is the Biggest Challenge in the Order to Cash Process?

Related Searches:

What is Order to Cash Process? 

Once a company receives an order the order to cash process starts. The process continues until the company receives cash for the order (hence it is called order to cash) and the customer receives the product.  

The best way to understand the order to cash process in via an example: 

Client Inquiry

A business requires general bookkeeping services. So the manager finds a website on Google that provides the best staff augmentation bookkeeping service. He fills out a contact us form on the company’s website to make an inquiry. 

During the inquiry process the manager will also write about the details of their company and what type of accounting services they are looking for. 

Order Management

The staff augmentation firm will receive the inquiry and will send the client an assessment to find out what type of accounting services they require. This step is known as order management. 

Note: Order management does not mean the same thing as OTC. Rather it is a part of it. (Read below to find out the difference between order management and order to cash process). 

Proposal and Contract Negotiation

Based on the needs assessment, the firm prepares a proposal outlining the scope of services, timelines, and pricing. Contract negotiations take place to finalize the terms and conditions, including service level agreements (SLAs) and payment terms.

A simple proposal/quotation can look like this: 

Order Fulfillment

Once the contract is signed, the staff augmentation firm identifies suitable accounting professionals from its pool of resources. The firm considers the client’s specific requirements, such as skill set, experience, and availability, to match the right professionals to the client’s needs.

The order fulfillment of a staff augmentation firm will be as follows: 

Onboarding and Training 

Selected professionals go through an onboarding process, which includes orientation to the client’s business processes, systems, and any specific accounting practices. Training may be provided to ensure that the professionals are well-equipped to meet the client’s expectations.

Assignment Deployment

The selected accounting professionals are deployed to the client’s site or integrated into remote work setups, depending on the nature of the engagement.

Service Delivery and Monitoring

The staff augmentation firm monitors the performance of its professionals to ensure that they meet the client’s expectations and comply with agreed-upon SLAs. Regular check-ins and performance reviews may be conducted to address any issues promptly.

Time and Attendance Tracking

The firm tracks the time and attendance of the deployed professionals to accurately bill the client for the services rendered.


Invoices are generated based on the agreed-upon billing cycle and terms in the contract. They include details such as the services provided, hours worked, and any other relevant charges.

Credit Management

Credit management is usually a part of an order to cash process when ordering a product. In this step, the company determines whether they should offer credit to their client. There are various ways to determine this, for example, credit history, business stability, credit score etc. 

Invoices are sent to the client for approval. Once approved, the client processes the payment based on the agreed-upon payment terms.

Revenue Recognition

The revenue from the invoiced services is recognized by the staff augmentation firm in its financial records.

Feedback and Continuous Improvement

Feedback is collected from both the client and the deployed professionals to assess the quality of service. Continuous improvement initiatives are implemented based on the feedback received to enhance service delivery.

The above order to cash process example is similar to WA’s OTC process. A good O2C ensures a streamlined and efficient workflow, from understanding the client’s needs to delivering quality accounting services and receiving payment.

Is Accounts Receivable Part of OTC Process?

Accounts receivable is one part of the whole OTC process. OTC process starts from the time the company receives an order till the time it will receive cash (payment). 

When the company sells its products on credit, it has to collect cash for the order that is delivered. Hence, accounts receivable is the amount that is owed by the company for the orders that it has fulfilled. Company has to carry out steps to ensure they receive timely payments from its customers. 

What is the Objective/Overall Goal of the OTC Process?

As demonstrated above, the OTC process involves various steps. So, the overall objective of the OTC process is to complete every step of the process to fulfill every order that the company receives, in a timely manner. 

What is the Biggest Challenge in the Order to Cash Process? 

Customer Satisfaction

The biggest challenge in the order to cash process is customer satisfaction. Customer satisfaction plays a big role for companies to grow. Hence, it is vital that the company fulfills the order efficiently and in a timely manner so that its customers are happy. 

Controlling Costs

Another factor that can be a challenge in managing the OTC process is controlling cost. OTC processes can have high costs hence companies have to take measures to control the costs while simultaneously fulfilling the orders on time. 

Learn more about how to control costs here

Inventory management

A company should be knowing its inventory quantity in real-time so that it can order inventory as soon as it’s below the inventory order quantity. There has to be a direct relationship between inventory management department and sales departments so that there aren’t any bottlenecks in the order to cash process. 

Read here to learn more about efficient inventory planning techniques. 

Inefficient IT system/skills

According to the research conducted in the context of the NWO (SIA-RAAK) project named ‘Order to Cash Process Optimization for SMEs’ (refer citation at the end of the guide), there can be other inefficiencies in the order to process department. This research specifically discusses the challenges logistics companies face in their O2C process due to inefficient IT systems or skills and lack of collaboration between departments. 

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  • Once a company receives an order the OTC process starts and continues until the company receives cash for the order and the customer receives the product. 
  • Accounts receivable is a part of the order to cash process. It is not the whole process itself. It is the amount that the customer owes to the company for receiving the order. 
  • The biggest challenge facing companies in managing the order to cash process is customer satisfaction.
  • The OTC process is an integral part of the company and ensures that its cash flow cycle is functioning smoothly. 

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