Order to Cash (OTC) Process Flow in SAP

Categories: SAP Sales and Distribution (SD)

Pic. Type: Process Flow Diagrams & Cycles (General)

Picture Description

This image shows the Order to Cash (OTC or O2C) process flow in SAP. The OTC process is the end-to-end flow of activities from receiving a customer order to receiving payment for the goods or services delivered. It’s broken down into three main phases: Sales Order, Delivery, and Bill to Customer, with each phase involving specific SAP transaction codes and activities.

Process Breakdown illustrated in this OTC process flow diagram:

Sales Order:
- VA01: Create the sales order. This is the initial step where the sales order is generated in the SAP system.
- VA02: Validate schedule lines confirmed for the item. This step ensures that the delivery dates and quantities are scheduled and confirmed based on availability.
- MMBE: Check available stock. Inventory levels are verified to confirm if the required items are in stock to fulfill the order.
Delivery:
- VL01N: Create delivery for the Sales Order. This transaction is used to create a delivery document which outlines the details of how and when the products will be delivered.
- VL02N:
  - Add picking quantity and perform Post Goods Issue (PGI). This step involves selecting the actual products for delivery from the inventory and updating the inventory records to reflect items that have been issued for delivery.
  - Validate that delivery is complete in Document Flow. Ensures all delivery-related documentation is finalized and accurate.
- MIGO: Check stock reduced. This transaction is used to verify that the inventory levels have been appropriately reduced following the goods issue.
Bill to Customer:
- VF01: Create the Billing Document with reference to delivery. This billing document serves as the invoice sent to the customer.
- VF02:
  - Release to Accounting if not yet released. This step is crucial for ensuring the billing document is posted to accounting for financial tracking.
  - Validate Accounting Documents. Confirms that all accounting entries related to the billing are correct and complete.
- VF03: Check document flow. This final check ensures all documents in the process are complete and properly linked.
Accounting and Payment:
- Customer does the payment: The payment from the customer is received, impacting the accounts as follows:
  - Credit Account Receivable.
  - Debit Bank Account.
- Accounting Entry is posted:
  - Debit Account Receivable.
  - Credit Sales/Revenue.