We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

What Does "Order to Cash" Mean?

By G. Wiesen
Updated May 16, 2024
Our promise to you
SmartCapitalMind is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At SmartCapitalMind, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject-matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

Order to cash refers to a particular method by which the sales process is analyzed and broken down to allow businesses to recognize each stage of a sale. While this can be applied to customer interactions in a retail environment, it is most often utilized for analysis of sales between one business and another. It is often used with computer software that can be utilized to evaluate and document the entire process, though it can just as easily be applied to paper records and analysis of sales. Order to cash consists of several stages or elements that make up the basic process of receiving, fulfilling, and charging for an order.

The order to cash process, sometimes referred to as OTC or O2C, begins with the establishment of customer presence. Customers must be identified and contacted to create an agreement by which a sales contract can be established. This can be a one-time sales service or a contractual agreement that results in ongoing sales over an extended period of time. Orders must then be received from the customer, allowing the business to recognize customer need and begin fulfilling the order.

To continue the order to cash process, the order placed by a customer must then be fulfilled on the part of the business. This means that products must be physically removed and prepared for shipment, or digital goods prepared for transmission to a customer. Proper inventory management is a key component to this step of the process, as it ensures that the order can be fulfilled by the company. Once the order is ready, then it can be distributed to the customer, either physically or digitally.

The process then continues once the customer receives the product ordered and is provided with an invoice or bill for the product. Customers must then pay for the products they have received, at which point the invoice is paid and the business can document the receipt of payment. The received payment is then typically applied to a company account from which other deductions, such as employee wages and manufacturing costs, are paid.

This analysis of the order to cash process is fairly general, and can be more fully elaborated for individual companies and business models. A number of different computer software programs have been developed to help track this process. These programs provide utilities for documenting each step of the process, and provide records to both businesses and customers.

SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Discussion Comments
By mitchell14 — On Jul 18, 2011

@aaaCookie- I think you are talking about writing "cash" on a personal check, rather than a person's name. As long as the writer signs it, that can then be cashed by anyone.

You can also get someone else to cash a personal check or paycheck this way by signing it, and then if you don't want it cashed you can write "for deposit only" on the check.

This is not to be confused though with the order to cash cycles explained in this article, or the concept of Cash on Delivery, when you are expected to pay for a package before the delivery person will give it to you-these are things more related to businesses, while what you are talking about is usually a personal business matter.

By aaaCookie — On Jul 17, 2011

I thought the order to cash idea was also used for anyone who wanted something cashed, like a paycheck or a personal check. What is it I'm thinking of, then?

SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.

SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.