O2C (Order to Cash)
What it Order to Cash
O2C is the process that starts when a customer places an order and ends when the company receives the payment.
📦 Simple Example:
Imagine you own a shop. A customer orders a phone, you deliver it, and then they pay you. That entire journey is O2C.
📋 Process steps:
Customer Order → Customer places an order.
Order Entry → The order is recorded in the system.
Order Fulfilment → Product/service is prepared.
Shipping → Product is delivered to the customer.
Invoicing → Bill is sent to the customer.
Payment Collection → Customer pays.
Cash Application → Payment is recorded in the system.
P2P (Procure to Pay)
What it means:
P2P is the process where a company buys goods/services from a supplier and then pays them.
📦 Simple Example:
Imagine your shop needs to buy phones to sell. You order them from a supplier and pay after receiving them. That is P2P.
📋 Process steps:
Purchase Requisition → Someone in the company asks to buy something.
Purchase Order (PO) → A formal order is sent to the supplier.
Goods Receipt → Supplier delivers the goods.
Invoice Receipt → Supplier sends a bill.
Invoice Verification → Company checks if goods and invoice match.
Payment Processing → Company pays the supplier.
R2R (Record to Report)
What it means:
R2R is the process of recording all business transactions and then reporting the financial results
📦 Simple Example:
At the end of the month, your shop needs to prepare a summary of how much it earned, spent, and how much profit you made. That’s R2R.
📋 Process steps:
Data Entry/Journal Entries → All income and expenses are recorded.
Reconciliation → Check and match records with bank, vendors, etc.
Trial Balance → Prepare a draft of accounts.
Adjustments → Fix any errors or add missing entries.
Financial Statements → Create reports like Profit & Loss, Balance Sheet.
Reporting → Share results with management or government (like tax filing).
Term | Full Form | Simple Meaning | Ends When... |
O2C | Order to Cash | Company sells something and collects money | Money is received from customer |
P2P | Procure to Pay | Company buys something and pays the supplier | Supplier is paid |
R2R | Record to Report | Company tracks transactions and reports them | Reports are finalized |
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