Order To Cash (O2C) Process in Oracle Fusion

The Order to Cash flow is the complete process of entering an order into the system (Sales Order), delivery the good(s) (Shipping), and then producing the Invoice for the goods. 

O2C Flow: Modules Involved

O2C Process Steps

• Receive Sales Order
• Book Sales Order
• Pick Release
• Ship Confirm
• Sales Returns
• Sales Invoice
• Receipt
• Reconciliation

Book Sales Order: Booking of the Sales order is done through Order Management and as the order progresses, users can track the status of the order.

Pick Release: Moving stock from Sub Inventory to Staging Area. Pick Release finds and releases the order and creates a move order request. The process of transacting move orders creates a reservation against the source sub inventory.

Ship Confirm: Moving stock from staging to customer address. Ship confirm is the process of confirming that items have shipped. Shipping Execution confirms that the delivery lines associated with the delivery have shipped.

Sales Returns: if are there are any returns from customers, they are recorded as Sales Returns.

Sales Invoice: Sales Invoice is created in AR based on Sales Order information in OM. Auto Invoice is a program which is used to import the Sales Orders from OM to AR as Sales Invoices.

Receipt: Customers make the payments based on sales invoices which is recorded as a receipt in AR.

Reconciliation: Receipt is reconciled with a bank statement line in Cash Management.

Some Key Setups in O2C

AR

• Assign Inventory Organization to BU
• Complete Invoice and Customer related setups

OM

• Setup Order Management Parameters
• Release Sequence Rules
• Pick Slip Grouping Rules
• Define Ship Confirm Rules
• Picking Rules and Rule Assignments
• Create Pick Wave Release Rules
• Create Staging Sub Inventory
• Shipping Parameters
• Create Carriers (Shipping Methods)

Pricing

• Price List
• Pricing Segment
• Pricing Strategy
• Customer Pricing Profile
• Pricing Segment
• Pricing Strategy Assignment

O2C Journal Entries

When customer places the order –No JE

When Booking the Sales Order –No JE

Pick Release- Check the available unit in Inventory and the quantity ordered by the customer

    Inventory Stage A/c……………Debit

    Inventory Finished goods a/c…..Credit

Ship Confirm(Sales order issues item): where we ship the product to customer site and decreases the Finished Goods inventory

    COGS A/c ……………Debit

    Inventory Valuation A/c………Credit

When invoiced customer

    Receivable A/c………………Debit

    Revenue A/c…………………Credit

AR Receipt

Receipt Confirmation A/c ………Debit

Receivables A/c………………….Credit

At Receipt Reconciliation

Cash A/C………………………Debit

Receipt Confirmation A/c…….Credit