What is Order-to-Cash (O2C)?

Order-to-Cash (O2C or OTC) is the complete business process that begins when a customer places an order and ends when the payment is collected and recorded. It encompasses every operational and financial step in between: order entry, credit check, inventory allocation, picking and packing, shipping, invoicing, payment collection, and cash application. O2C is one of the most critical end-to-end processes in any product-based business because it directly determines how quickly revenue moves from a customer’s commitment to actual cash in the bank.

Why It Matters

The efficiency of your order-to-cash cycle directly impacts cash flow, customer satisfaction, and profitability. A streamlined O2C process means faster revenue recognition, lower Days Sales Outstanding (DSO), and fewer disputes or payment delays. Conversely, friction at any stage—order entry errors, fulfillment delays, invoicing mistakes, or payment processing failures—creates a domino effect that slows down cash collection and increases operational costs.

For multichannel businesses, O2C complexity multiplies with each sales channel. Orders from Amazon, Shopify, wholesale portals, and B2B accounts each have different payment terms, invoicing requirements, and reconciliation workflows. Without a unified O2C process, businesses end up with fragmented data, manual reconciliation, and delayed revenue recognition that obscures true financial performance.

How It Works

The order-to-cash process flows through several sequential stages:

• Order Management: Orders are received from sales channels, validated for accuracy (correct products, pricing, shipping address), and entered into the fulfillment pipeline. Automated order routing directs orders to the optimal fulfillment location based on inventory availability, proximity to the customer, and shipping cost.
• Credit Management: For B2B and wholesale orders, credit checks verify that the customer’s account is in good standing and the order falls within approved credit limits. This step prevents fulfilling orders that may result in uncollected receivables.
• Fulfillment: Inventory is allocated, picked, packed, and shipped. Tracking information is generated and shared with the customer. This is where operational efficiency has the greatest impact on the overall O2C cycle time.
• Invoicing: An invoice is generated based on the shipped order—reflecting actual quantities shipped, applicable taxes, shipping charges, and any discounts or promotional pricing. For marketplace sales, the marketplace handles invoicing to the end customer, but the seller still needs to reconcile marketplace payouts.
• Payment Collection: Payment is collected via the appropriate method—credit card capture at time of order, marketplace payout schedules, or net-30/60/90 payment terms for wholesale accounts. Payment is matched to the corresponding invoice and order.
• Cash Application and Reconciliation: Received payments are applied to open invoices, and any discrepancies (short payments, overpayments, chargebacks) are flagged for resolution. The completed transaction is recorded in the accounting system for revenue recognition and financial reporting.

How Nventory Helps

Nventory streamlines the order-to-cash process by unifying order management, inventory allocation, and fulfillment into a single platform. Orders from all sales channels flow into one system, are automatically routed to the optimal fulfillment location, and progress through picking, packing, and shipping with real-time status tracking. By eliminating manual handoffs between order entry, warehouse operations, and shipping, Nventory compresses the fulfillment portion of the O2C cycle—getting products to customers faster and accelerating the path to payment collection.