The order-to-cash process covers the steps between receiving a customer order and recording the payment. It includes sales order management, fulfillment, invoicing, collections, and accounting.
Payment delays make the process harder to manage. Atradius reported in a 2025 trends report that 44% of B2B credit sales were overdue. The report attributed late payments primarily to customer payment-processing inefficiencies and temporary liquidity issues.
An order-to-cash process helps teams move orders through the fulfillment process, send accurate invoices, and collect payments. This guide explains how the process works and how to improve each step.
What is the order-to-cash process?
The order-to-cash (O2C) process starts when a customer places an order and ends when the business records payment. The process includes order management, fulfillment, invoicing, and accounts receivable. O2C software helps track orders, manage invoices, and review payment data.
Order to cash vs. quote to cash, procure to pay, and order to pay
Businesses use these terms to separate customer revenue workflows from supplier payment workflows. The difference lies in where each process starts and which side of the transaction it follows.
| Process | Main user | Covers |
|---|---|---|
| Order to cash (O2C) | Sales, customer service, finance | Customer order to payment received |
| Quote to cash (Q2C) | Sales and finance | Customer quote to payment received |
| Procure to pay (P2P) | Procurement, purchasing, accounts payable | Business need to supplier payment |
| Order to pay (O2P) | Procurement and accounts payable | Purchase order to supplier payment |
- Order to cash (O2C) begins after a customer order exists. It focuses on fulfilling the order, getting paid, and recording the transaction.
- Quote to cash (Q2C) starts earlier. It includes quoting, pricing, and contract steps before the order moves into billing and payment collection.
- Procure to pay (P2P) follows the buyer’s side of a purchase. It covers how a company requests goods or services, approves the purchase, and pays the supplier.
- Order-to-pay (O2P) is a narrower purchasing workflow. It usually starts once a purchase order has been created and continues through supplier payment.
8 steps in the order-to-cash (O2C) process
The O2C process maps a customer order from fulfillment through payment. It identifies which team owns each part of the cycle, where work passes between teams, and where cash-flow delays appear.
Payment timing depends on the business model. In ecommerce, customers often pay at checkout. In B2B, customers receive an invoice and pay later under agreed payment terms.
The order-to-cash process moves through these steps:
- Order management
- Order processing
- Credit management
- Order fulfillment
- Shipping
- Invoicing and billing
- Accounts receivable and payment collection
- Revenue recognition, reporting, and analysis
1. Order management
Order management starts when a customer places an order. The business records the order and captures the details needed to review, route, and prepare it.
The business begins collecting the following information in this step:
- Customer details. Name, contact information, billing details, and delivery address.
- Order details. Product or service ordered, quantity, price, taxes, discounts, and requested delivery date.
- Payment details. Payment method for ecommerce orders, or payment terms for B2B orders.
- B2B details. Purchase order number, sales rep or account owner, and approval status.
Order management gives teams the information they need to confirm the purchase and move the order forward. In Shopify, customer details and order history are stored in a customer profile, which provides a shared view across online sales, marketing, and other customer touchpoints.
2. Order processing
Order processing starts after the business receives the order. The order is entered into the right system, verified, and prepared for the next step.
Teams will confirm the basics, such as the customer, items ordered, and delivery details. Then check whether anything needs to be reviewed before fulfillment.
Ecommerce orders may only need payment and inventory confirmation. B2B orders may require a purchase order number, custom pricing, credit terms, or account approval.
Order processing also creates a record of where the order stands. As the order moves forward, its status can show whether it is pending, approved, or ready for fulfillment.
3. Credit management
Credit management is primarily part of B2B sales because customers often pay after receiving an invoice. Ecommerce orders usually skip this step because payment happens at checkout.
Before releasing a B2B order, the business may review the customer’s credit limit, payment history, open invoices, and approval status. Many businesses also verify the payment terms, such as net 30 or net 60.
After credit review, the order can move to fulfillment.
4. Order fulfillment
Order fulfillment starts after the order is approved. The business checks whether the product is available or whether the team has enough capacity to complete the work.
For physical products, fulfillment can include inventory checks, picking, packing, and preparing the order for shipment or pickup. If an item is unavailable, the order may need a backorder or split shipment.
5. Shipping
Once the order is ready, it moves to shipping. In this step, the business confirms the delivery address, shipping method and carrier, cost, and promised ship date.
Tracking keeps the order visible after shipment. With Shopify Shipping, a store can buy shipping labels from supported carriers directly in the Shopify admin. After tracking information is added, customers can track delivery through the order status page, shipping emails, and the Shop app.
When an issue arises, the business has to record it, confirm the order status, and choose the next step before the O2C process continues. That could mean reshipping the order, sending a replacement, or issuing a refund.
For US mail, internet, or telephone merchandise orders, Federal Trade Commission (FTC) guidance says sellers need a reasonable basis for their shipping promises. When no shipment time is stated, sellers need a reasonable basis for shipping within 30 days.
6. Invoicing and billing
Invoicing and billing create the payment request for the order. The sales invoice is built off the order record, pricing, delivery details, and payment terms. It’ll include:
- Order information. Order number, invoice date, due date, and purchase order number.
- Customer information. Buyer contact, billing address, and shipping address.
- Charges. Products or services, quantities, prices, taxes, discounts, shipping, and total amount due.
- Payment details. Accepted payment methods, payment terms, deposit requirements, and any late fees.
Digital invoices can be sent by email or shared through a payment link. In Shopify, draft order invoices include a checkout link where the customer can enter billing information, choose a shipping method, and submit payment. Shopify B2B also lets businesses set payment terms by company location and use those terms on B2B draft orders.
7. Accounts receivable and payment collection
Accounts receivable covers unpaid customer invoices after billing. These teams track what has been paid and what is still outstanding.
When a payment arrives, they apply it to the correct invoice. If payment is late, they can send a reminder or contact the customer’s accounts payable team.
8. Revenue recognition, reporting, and analysis
Revenue recognition records revenue in the proper accounting period. The timing depends on the business model, contract terms, and accounting rules.
An ecommerce sale may be recorded when the order ships or is delivered. Subscription, service, and B2B revenue may be recorded over time.
Thorough analysis of data helps businesses see where improvement is needed. Depending on the software, businesses can detect patterns of miscommunication, the origins of bottlenecks in customer orders, and how inefficiencies in one department affect other departments.
By reviewing this data regularly, businesses can shorten the time between receiving an order and collecting payment, not to mention improve the customer experience.
Order-to-cash process example
A wholesale customer orders 200 units from a supplier. The supplier records the order, verifies the order details, checks the customer’s payment terms, and confirms product availability.
Once the order is approved, the warehouse picks, packs, and ships the products. The supplier shares tracking information and sends an invoice with the agreed-upon due date.
Accounts receivable tracks an invoice until payment is received. After payment is recorded, accounting recognizes the revenue, includes the sale in financial reporting, and reviews O2C data to improve future operations.
Benefits of improving the O2C process
Investing in your O2C process has the following benefits:
More stable cash flow
Cash flow is a pressure point for small businesses. In the Federal Reserve Bank’s 2025 Report on Employer Firms, 56% of small employer firms cited paying operating expenses as a financial challenge, and 51% cited uneven cash flows.
A faster order-to-cash process can help a business collect cash sooner. That can improve working capital because less money is tied up in unpaid invoices.
In Shopify’s Q4 2025 Survey of Store Owners,* 34% of store owners cited ensuring stable cash flow as their second business goal. The same survey found that 79% of store owners use profits to self-fund growth.
Better customer communication
Clear handoffs give each team the order information it needs to answer customer questions:
- Fulfillment can confirm shipment status.
- Customer service can explain delays.
- Billing can answer invoice questions from the same order record.
Customer expectations are high when issues occur. Narvar’s 2025 State of Post-Purchase Report, based on a survey of US online shoppers, found that shoppers want acknowledgement (46%), clear explanations (46%), and real-time updates (45%) when there’s a problem.
An O2C process keeps order status and delivery details in one place and consistent across teams. Customers can get more accurate information about their orders and next steps easily.
Reduce fulfillment delays
Order-to-cash handoffs affect how quickly an order moves from purchase to delivery. Busy Bee Tools said disconnected online and in-store systems created data discrepancies and inventory issues that sometimes hurt customer experience.
After moving to Shopify and integrating with its ERP, the company reduced fulfillment time for in-stock items from 24 to 36 hours to as little as four hours.
“A customer can place an order at 10 a.m. and have a tracking notification by 2 p.m. That speed is what allows you to scale,” says Hanif Balolia, president of Busy Bee Tools.
Common order-to-cash challenges
Order-to-cash problems can delay orders, invoices, and payments. Even small delays can affect cash flow and make it harder to pay suppliers, employees, and operating expenses.
In Shopify’s Survey of Store Owners,* 20% of store owners said they wished they had waited for consistent cash flow before scaling, making it their top regret. The right O2C processes help businesses move orders more efficiently.
Here are the most common O2C challenges and how to fix them.
- Slow credit approval. Credit reviews can delay B2B orders when payment terms, credit limits, or account approvals are unclear. Set approval rules before orders reach finance.
- Inventory inaccuracies. If inventory records don’t match what’s actually in stock, businesses may promise products they can’t ship. Check availability before releasing orders to fulfillment.
- Fulfillment delays. Missing item details, shipping information, or staffing capacity can slow fulfillment. Review those details before work begins.
- Invoice errors. Wrong amounts, missing purchase order numbers, or unclear terms can delay payment. Match every invoice against the order and delivery record before sending.
- Late payments. The Atradius B2B Payment Practices Trends US 2025 report found that invoices affected 43% of credit-based B2B sales. The most common reasons were customer liquidity issues (45%), payment-process delays (33%), supply chain disruptions (26%), and invoice disputes (23%). Assign ownership for reminders, disputes, and overdue accounts.
- Fragmented data. Separate order, inventory, invoice, and payment records make it harder to reconcile information, so customers wait longer for answers. Use shared systems or integrations so teams work from the same information.
How to improve the order-to-cash process
Use these best practices to reduce delays between receiving an order and collecting payment:
Set process standards
Document processes, approval criteria, and required information so every order follows the same workflow.
Automate repeatable tasks
Use tools like Shopify Flow to tag orders, route approvals, send alerts, hold fulfillment, or create draft orders based on set rules. Automation also helps businesses process orders consistently across sales channels.
“When a customer orders our product on somebody else’s website, that order just pops right into our system. It can go through all our standard workflows,” says Adam Wolfe, founder and CEO of Boost Auto.
Use digital invoices
Send invoices by email or payment link. In Shopify, draft order invoices can include a checkout link for online payment.
Connect order and payment data
Give sales, operations, and finance access to the same order, payment, and payout information so they can resolve issues faster. Shopify Payments lets stores review payments and payout details in the Shopify admin.
Review bottlenecks often
Check where orders slow down, such as credit review, fulfillment, invoicing, collections, or payout reconciliation. In Shopify’s Survey of Store Owners,* 69% of store owners said they review finances at least weekly.
Assign owners for exceptions
Name the person or team responsible for delayed approvals, invoice disputes, failed payments, returns, and overdue accounts so situations don’t sit unresolved.
Order-to-cash metrics to track
Order-to-cash metrics help businesses measure how efficiently orders move from placement to payment. The table below shows the metrics to track the O2C process.
Having order, payment, and payout data in one place also makes it easier to spot trends over time.
“All that data lives under Shopify, which makes forecasting and planning so much easier,” says Kenny Haisfield, founder of Kenny Flowers.
| Metric | What it shows |
|---|---|
| Order cycle time | How long orders take to move from placement to completion or payment. |
| Fulfillment time | How long it takes to pick, pack, and ship an order. |
| Invoice timing | How quickly invoices go out after fulfillment or delivery. |
| Days sales outstanding | How long it takes to collect payment after invoicing. |
| Overdue invoice rate | How much billed revenue is past due. |
| Dispute rate | How often invoice or order disputes delay payment. |
| Return rate | How often customers return orders. |
| Payment status | Whether orders are paid, pending, refunded, or overdue. |
| Payout reconciliation | Whether received payments match expected payouts. |
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Order-to-cash process FAQ
Why is the O2C process important?
A streamlined O2C process helps businesses fulfill orders accurately, send invoices on time, and resolve payment issues faster. Customers receive their orders sooner and encounter fewer billing problems, which can improve their overall experience.
What are the benefits of a streamlined O2C?
When a business runs an efficient O2C process, teams have better visibility into order, invoice, and payment status, which makes it easier for customer service to answer nearly all questions. Both customers and vendors can be confident they are working with a reliable business. Creating this type of positive relationship with customers is not only good business practice, but it can give businesses a competitive edge.
Who owns the order-to-cash process?
No single person owns the entire process. Order to cash has shared ownership across sales, fulfillment, finance, accounts receivable, and accounting. Each team owns its part of the cycle, but finance or operations often oversees the full workflow.
What is the difference between O2C and P2P?
Order to cash follows the seller’s side of a transaction, from customer order to payment collection. Procure to pay covers the buyer’s side, from purchasing goods or services and paying the supplier.
What is the difference between order to cash and quote to cash?
Quote to cash includes the sales activities that occur before an order, such as pricing, quoting, proposal preparation, and contract management. Order to cash begins after the customer places the order and includes fulfillment, invoicing, payment collection, and revenue recognition.
*Based on a 2025 survey of 500 Shopify merchants conducted in English across Australia, Canada, the United Kingdom, Ireland, New Zealand, and the United States. Respondents were established merchants with two or more years on the platform. Results reflect the experiences of this specific sample and may not be representative of all merchants.
