3 minute read

What is an Order-to-Cash process?

The Order-to-Cash process

An Order-to-Cash process is the process of receiving a customer’s order, to the customer’s payment of his outstanding account. The Order-to-Cash process is an order process as seen by the supplier and thus it should be assigned to the sales department within the company.

The Purchase-to-Pay process is the equivalent of the Order-to-Cash process, but as seen from the procurement side.

The diagram below shows an example of an Order-to-Cash process between a company (supplier) and a customer.


Example of an Order-to-Cash process
Example of an Order-to-Cash process

Modern Order-to-Cash processes are executed via EDI messages. This means that electronic, non paper, documents are exchanged between involved companies, and there is no human intervention needed.

The diagram above shows a customer transmitting an electronic order (ORDERS) to his supplier. The supplier will then automatically process the order in his ERP system and initiate provisioning of the goods.

An Order confirmation (ORDRSP) is returned to notify the customer that the order has been accepted as is, accepted with changes, or declined. Depending on the industry and field of application, an Order change (ORDCHG) may occur. To keep it simple, this type is not shown in the diagram above. Order changes will also be acknowledged with order confirmations (ORDRSP).

Webinar - Moving from a Local Converter to Fully Managed EDI
Learn how fully managed EDI could help to boost your business

An electronic dispatch advice (DESADV) will be transmitted to the customer before his goods are shipped. This is to inform a customer about an oncoming delivery, allowing him to plan his inbound logistics.

After receiving the goods, the customer will confirm the quantities received via a goods receipt advice (RECADV). This allows customers to inform suppliers of any deviations. Deviations may be the result of losses during delivery (goods lost in transit) or lack of quality (goods rejected due to unacceptable quality).

A supplier will transmit his electronic invoice (INVOIC) upon receipt of the goods by his customer. The customer will transmit a remittance advice (REMADV) to notify the supplier of payments made.

Depending on industry and applications, different types of documents may be used. In this respect refer also to an overview of EDI document types used in the trade and an overview of the EDI document types used in the automotive industry.

Order-to-Cash process in a SAP ERP system

The effective implementation of EDI-based Order-to-Cash processes requires corresponding ERP system support. Modern ERP systems such as SAP ERP will support various types of Order-to-cash processes and different EDI document types.

SAP ERP Order-to-Cash processes are supported by the SD module (Sales & Distribution) and incoming invoices may also have interdependencies with the FI module (Finance).

Any questions?

Any questions about the Order-to-Cash process and support offered by EDI documents – maybe also in connection with a SAP system? Please contact us – we look forward to assisting you!

 

SAP ERP and SAP S/4HANA are the trademarks or registered trademarks of SAP SE or its affiliates in Germany and in several other countries. 

most read

Keep on reading

8 minute read

What Makes a Good EDI Dashboard?

A good EDI dashboard is central to successful B2B interactions. In this article we explore the key qualities of an effective solution.

10 minute read

EDI vs API: A Battle of Brothers

In recent years many have suggested that API may eliminate the need for EDI. But is this really true? And are they really rivals?

6 minute read

Expert Perspective — Christoph Ebm: EDI Post-Covid

In this insightful interview, ecosio CEO Christoph Ebm shares his thoughts on supply chain resilience and what the future holds for EDI.

7 minute read

Choosing an EDI Platform - A Breakdown

Looking for advice and information on EDI platforms and what what to look for when deciding between the various options? Look no further!

7 minute read

A Guide to Efficient EDI Systems

In this article we break down what an EDI system is, what different types of system offer, and things to remember when selecting a solution.

9 minute read

EDI Integration: What is It and How Can It Help Your Business?

Efficient EDI integration can have a transformative effect on your business. Read our article to find out how it can benefit you.

2 minute read

ecosio Becomes a Partner of GS1 UK

ecosio is proud to be a partner of GS1 UK and helping to help shape the future of GS1 standards and support industry-wide development.

4 minute read

The Most Common ANSI ASC X12 Party Identifiers and How to Use Them

ANSI X12 party identifiers are a common source of errors. In this article we explore how to avoid issues and what the most common X12 party identifiers are.

9 minute read

Using EDIFACT Parties Correctly - A Breakdown

Errors involving EDIFACT party codes (or EDIFACT parties) are a key cause of master data issues. Find out why.

8 minute read

What is Master Data Synchronisation and Why is it Needed?

Find out how conducting a master data synchronisation can make everyday EDI exchanges and partner onboarding easier and more efficient.

10 minute read

A Brief Introduction to Modern EDI Systems

Are you aware of what modern EDI systems can offer? In this article we explore the recent trend towards fully managed solutions.

5 minute read

The Three Most Common EDI Pitfalls

While EDI can offer substantial benefits, achieving the perfect solution isn't always easy. Read our article to find out where many go wrong.

We use cookies to provide an optimal website experience. You decide which one you want to allow. Depending on the setting, however, not all functionalities may be available to you. Data protection & imprint.

WHITE PAPER

EDI in the Retail Industry

Discover the secrets to B2B integration success with our comprehensive white paper