Order to Cash Process: 8 Steps and Where Stock Fits

The order to cash process is the sequence that turns a customer's order into recorded payment: take the order, check credit, fulfil, ship, invoice, collect and report. Sales, the warehouse and accounts each own part of it. That is why a delay often starts in one team and surfaces in another.

There is no single official split. Dispute resolution and cash application get their own steps in some versions and sit inside receivables in others. The eight steps below follow the order in which your teams touch an order. Microsoft's business-process catalogue also treats fulfilment ("Inventory to deliver") as a separate process that starts once orders are placed, which matches step 4 here (Microsoft Learn).

Order to Cash vs Quote to Cash vs Procure to Pay: What Is the Difference?

Order to cash vs quote to cash comes down to the starting point. O2C begins when the customer places an order. Quote to cash (Q2C) begins earlier, at pricing and contract. Procure to pay (P2P) is the purchasing side and ends with a payment to a supplier.

Every O2C step sits inside Q2C, which adds configuration, pricing, quoting and contract management before the order (Wikipedia). If your reps already build quotes in Salesforce, Q2C is your wider view. This guide covers the part after the order is placed.

Order to cash decides how fast a sale becomes money you can spend. Three things improve when the cycle runs cleanly.

Cash flow. Less money sits in unpaid invoices, so you can buy stock and pay suppliers without waiting on customers.

Fewer disputes. When the quantity ordered, delivered and invoiced agree, your accounts team spends less time answering queries and more time collecting.

Customer trust. A delivery date that holds is the part of the process your customer actually sees.

Slow collection is a particular strain on Indian small and mid-sized businesses.

According to the Delayed Payments Report 3.0, released by GAME, FISME and C2FO in November 2025, delayed payments owed to India's MSMEs stood at ₹7.34 lakh crore as of March 2024.

The eight order to cash process steps are order management, order processing, credit management, order fulfilment, shipping, invoicing, accounts receivable (AR, the money customers owe you) with payment collection, and reporting. Stock is checked in steps 1 and 2 and committed after step 3.

1. Order Management

Order management records who is buying, what, how many, at what price and by when. The date needs the most care. A customer who asks for delivery in a week hears your answer as a commitment, so the stock check starts here, while the order is still being entered, not after it is confirmed.

2. Order Processing

Order processing validates the order and sets a provisional delivery date. Confirm product codes, quantities, prices and the delivery address. Then quote a date from stock that is free now plus supplier deliveries that are confirmed. Repeat the stock check, because it may have changed since step 1. The date stays provisional until credit clears and stock is committed.

3. Credit Management

Credit management decides whether you ship on credit, and it comes before the stock is committed. Compare the customer's credit limit with what they already owe plus this order. Once the order is approved and firm, commit the stock. Before that point the units still look free to every other rep. If credit fails, nothing is held and the provisional date is withdrawn.

4. Order Fulfilment

Order fulfilment is picking, packing and preparing the stock committed to the order. The warehouse picks units already set aside for this order, not whatever is on the shelf. If the quantity falls short, decide now whether to ship part and back-order the rest. If a more urgent order arrives, stock can be reallocated by delivery date.

5. Shipping

Shipping hands the goods to the customer and records what left. Arka can help you generate packing slips directly from Salesforce when you ship, including partial shipments. The record of what went out is made at dispatch, not rebuilt later. Keep proof of delivery with the order. The shipped quantity, not the ordered quantity, is what step 6 bills.

6. Invoicing

Invoicing bills the customer for what was shipped. Invoices are recorded in QuickBooks Online or Tally. Our Tally integration sends invoices, bills and transaction details to Tally, and our QuickBooks Online integration sends the accounting entries for cost allocations. Whichever you use, take the invoice quantity from the packing slip.

7. Accounts Receivable and Payment Collection

Accounts receivable and payment collection happen in your accounting tool. In TallyPrime, the Outstandings reports show pending balances, due dates, overdue bills and age-wise ageing, and can send reminders by email, WhatsApp or print. Bill-wise tracking must first be switched on under Features (F11), per Tally Solutions' help page, updated 5 November 2026. Teams that already run QuickBooks Online can use the Receive Payment screen and A/R ageing report that Intuit documents (Intuit). Our pages don't state whether payment status syncs back to Salesforce, so confirm that in a demo.

8. Reporting

Reporting shows where the cycle slows. Review three numbers monthly: order cycle time, days sales outstanding and on-time delivery. Have sales and finance use the same start and end points, or they will report different results for the same orders. The definitions are in the metrics section below.

Stock is checked at order entry and committed after credit approval. The check keeps the delivery date honest. The commit stops the same units being promised twice. Together they decide whether steps 5 to 7 ship the right quantity, invoice it correctly and collect on time.

Check Available Stock Before You Promise a Date

Quote only from stock that is free, not from the on-hand count. Free stock is what is on hand minus what is already committed to other orders. Add supplier deliveries only when they are confirmed for a date. We show live stock across warehouses, with lead times, beside quotes and orders in Salesforce, so the rep sees it while creating the order. For the arithmetic, see a worked example across two warehouses.

A check is not a hold. Between order entry and credit approval, another rep can take the same units. Check again when you commit.

Commit Stock Once the Order Is Credit-Approved and Firm

For a business order, commit when credit is approved and the order is firm. With Commit Inventory you can commit, allocate and reallocate stock by delivery date in Salesforce, which prevents overselling and supports accurate delivery dates.

Whether to hold stock at order entry, approval, payment or warehouse release is a policy choice with trade-offs. We cover them in when to hold stock in the order lifecycle.

What Goes Wrong When You Promise From On-Hand Stock: An Order to Cash Process Example

This is an illustrative example with our own numbers, not customer data. A distributor receives an order for 300 motor controllers at ₹2,400 each, ₹7,20,000 in total, wanted in 5 days. The warehouse holds 500, and 320 are committed to two confirmed orders, so 180 are free. A supplier delivery of 200 is confirmed for day 9. The customer's limit is ₹15,00,000 and they owe ₹4,00,000. With this order, exposure is ₹11,20,000, so credit passes.

Quoting from the on-hand count (500) promises all 300 by day 5, and the date is missed. Quoting from free stock gives two honest options: ship 180 on day 5 and 120 on day 10, or promise all 300 for day 10. If another rep takes part of the 180 before you commit, even the first option fails.

Ship 180 and invoice 300, and you bill ₹7,20,000 for goods worth ₹4,32,000 (180 × ₹2,400). The ₹2,88,000 difference (120 × ₹2,400) gives the customer a reason to hold the whole payment.

Salesforce owns orders and accounts. Arka Inventory, working inside Salesforce, owns stock availability and commitment. Tally, or QuickBooks Online for teams that already run it, records invoices and receivables. Each step has a named home for its numbers, so no figure is kept in two places.

Most problems come from three records being treated as one: the order, the delivery and the invoice. An order is a request, a delivery records what left, and an invoice bills it. A partly delivered order stays open until the balance ships or is cancelled.

To find your own weak point, take your last 20 delivered orders. Count those delivered on or before the date promised. Count those where the invoiced quantity equals the packing-slip quantity. Any quantity mismatch is a process fault. Any late order where stock was short when the date was given is a stock-check fault.

Track three order to cash metrics: order cycle time, days sales outstanding and on-time delivery against the committed date. Each needs a written start and end point, or two teams will report different numbers for the same orders.

• Order cycle time. We recommend measuring from the order entered (step 1) to payment recorded (step 7). Track order to dispatch separately and never mix the two in one chart. An Arka customer's case study from June 2026 measures its cycle from confirmed order to the warehouse's pick-and-ship trigger. That ends before dispatch, invoice and cash.
• Days sales outstanding (DSO). DSO is the average days taken to collect after a credit sale: average receivables ÷ credit sales × days in the period. Illustrative: average receivables of ₹36,00,000 and credit sales of ₹1,20,00,000 over 90 days give 36,00,000 ÷ 1,20,00,000 × 90 = 27 days.
• On-time delivery. Orders delivered on or before the committed date ÷ orders shipped in the period. Measure against the date committed at step 3, not the customer's first request. Illustrative: 46 of 50 orders gives 92%.

Run these six tests on every order. Each has a clear pass.

Before you confirm your next order, run one test: does free stock cover the full quantity? If it does, commit it once credit clears. If it does not, split the shipment or move the date, and save the date you commit on the order. That one habit keeps the rest of the cycle honest. Shipments match orders, invoices follow packing slips, and your accounts team has fewer reasons to chase a disputed bill.

Watch for one trap: a stock check at order entry is not a hold, so check again at the moment you commit. To see this on your own order flow in Salesforce, start our 15-day free trial, with full access to all features and no credit card needed, or request a demo and we will walk through your orders with you.