The Order-to-Cash (OTC) process in SAP is a critical business process that encompasses the entire lifecycle of a customer order, from order creation to cash receipt. It integrates various SAP modules, primarily SAP Sales and Distribution (SD), with some touchpoints in SAP Financial Accounting (FI) and SAP Materials Management (MM). Below, I’ll elaborate on the OTC process in SAP with detailed steps, covering the end-to-end flow.
Overview of the OTC Process
The OTC process typically includes the following key stages:
- Pre-Sales Activities
- Sales Order Creation
- Availability Check and Delivery Scheduling
- Outbound Delivery
- Picking and Packing
- Goods Issue
- Billing
- Payment Receipt
Let’s break it down step-by-step with detailed explanations for each phase.
Step 1: Pre-Sales Activities
Pre-sales activities lay the foundation for the OTC process. These are optional steps but are commonly used to manage customer interactions before an order is placed.
- Customer Inquiry: A customer expresses interest in a product or service. In SAP SD, this is recorded using transaction code VA11 (Create Inquiry).
- Enter the customer number, material details, and requested quantity.
- Assign an inquiry type (e.g., “IN”).
- Save the inquiry, which generates an inquiry number.
- Quotation: Based on the inquiry, a quotation is created to provide pricing and terms to the customer. Use transaction VA21 (Create Quotation).
- Reference the inquiry number (optional).
- Input customer details, material, quantity, pricing conditions (e.g., discounts), and validity period.
- Save the quotation, generating a quotation number.
- Outcome: The customer reviews the quotation and decides whether to proceed with an order.
Step 2: Sales Order Creation
The sales order is the formal commitment from the customer to purchase goods or services. It’s the starting point of the core OTC process.
- Transaction Code: Use VA01 (Create Sales Order).
- Key Inputs:
- Order Type: Define the type of order (e.g., “OR” for standard order).
- Sales Organization: Specify the organizational unit responsible for the sale.
- Distribution Channel: Define how goods reach the customer (e.g., wholesale, retail).
- Division: Product group or category.
- Sold-To Party: Customer placing the order.
- Ship-To Party: Delivery recipient (may differ from Sold-To Party).
- Material and Quantity: Items ordered and quantities.
- Pricing Conditions: Automatically populated based on condition records (e.g., discounts, taxes).
- Steps:
- Enter the order type and organizational data.
- Input customer and material details.
- Check pricing and availability (system performs an Availability-to-Promise (ATP) check).
- Save the sales order, generating a sales order number (e.g., 100001).
Step 3: Availability Check and Delivery Scheduling
SAP checks whether the requested materials are available and schedules delivery.
- Availability Check (ATP):
- Performed automatically during sales order creation.
- Checks stock in the warehouse, planned production, or purchase orders.
- If stock is unavailable, the system proposes a future delivery date or partial delivery.
- Delivery Scheduling:
- The system calculates the delivery date based on lead times (e.g., transportation, picking, packing).
- Updates the sales order with confirmed quantities and dates.
- Outcome: The sales order is updated with a schedule line confirming when and how much can be delivered.
Step 4: Outbound Delivery
Once the order is confirmed, the next step is to create a delivery document to initiate the physical movement of goods.
- Transaction Code: Use VL01N (Create Outbound Delivery) or VL10D (Delivery Due List) for batch processing.
- Key Inputs:
- Reference the sales order number.
- Specify the shipping point (location from which goods are shipped).
- Enter the delivery date and quantities.
- Steps:
- Enter the sales order number and shipping point.
- Verify the materials and quantities to be delivered.
- Save the delivery document, generating a delivery number (e.g., 800001).
- Outcome: The delivery document authorizes the warehouse to prepare the goods.
Step 5: Picking and Packing
This step involves physically preparing the goods for shipment.
- Picking:
- Transaction: VL02N (Change Outbound Delivery).
- Select the delivery document and go to the Picking tab.
- Enter the picked quantities (manually or via integration with Warehouse Management (WM)).
- Confirm picking to update stock levels.
- Packing:
- Optional step to assign packaging materials (e.g., boxes, pallets).
- Use the “Pack” function in VL02N to specify handling units.
- Outcome: Goods are picked from the warehouse and packed, ready for shipment.
Step 6: Goods Issue
Goods issue (GI) records the movement of goods from the warehouse to the customer, updating inventory and financial records.
- Transaction Code: Use VL02N (Change Outbound Delivery).
- Steps:
- Open the delivery document.
- Go to the “Post Goods Issue” option.
- Verify quantities and storage location.
- Post the goods issue.
- System Impact:
- Inventory Management: Stock is reduced in the warehouse (MM module).
- Accounting: Cost of Goods Sold (COGS) is posted, and inventory value is updated (FI module).
- A material document and accounting document are generated.
- Outcome: Goods are officially shipped, and ownership transfers to the customer.
Step 7: Billing
Billing generates an invoice for the customer based on the delivered goods.
- Transaction Code: Use VF01 (Create Billing Document).
- Key Inputs:
- Reference the delivery document or sales order.
- Verify pricing conditions (e.g., price, taxes, freight charges).
- Steps:
- Enter the delivery number or sales order number.
- Check the billing items and amounts.
- Save the billing document, generating an invoice number (e.g., 900001).
- System Impact:
- Accounts Receivable: A receivable is posted in FI against the customer.
- An accounting document is created (e.g., Dr. Customer, Cr. Revenue).
- Outcome: The invoice is sent to the customer for payment.
Step 8: Payment Receipt
The final step is recording the customer’s payment to close the OTC cycle.
- Transaction Code: Use F-28 (Post Incoming Payments) in the FI module.
- Steps:
- Enter the customer number and company code.
- Input the payment amount and date.
- Reference the invoice number to clear the open item.
- Post the payment.
- System Impact:
- Accounts Receivable: The customer’s open item is cleared.
- Bank Account: Cash or bank balance is updated.
- An accounting document is generated (e.g., Dr. Bank, Cr. Customer).
- Outcome: The OTC process is complete, and cash is received.
Additional Notes
- Integration Points:
- SD-MM: Inventory updates during goods issue.
- SD-FI: Revenue recognition during billing and payment posting.
- SD-WM: Warehouse management for picking and packing (if applicable).
- Monitoring: Use transaction VA03 (Display Sales Order), VL03N (Display Delivery), or VF03 (Display Billing Document) to track the process.
- Rush Orders: For urgent orders, SAP supports a streamlined process (e.g., order type “RO”) where delivery and goods issue occur immediately after order creation.
- Condition Techniques: Pricing, discounts, and taxes are managed via condition records (VK11/VK12).
End-to-End Example
- Customer inquires about 100 units of Product A (VA11).
- Quotation is created for $10/unit (VA21).
- Customer places a sales order for 100 units (VA01).
- System confirms stock availability and schedules delivery for March 5, 2025.
- Delivery document is created (VL01N).
- Warehouse picks and packs 100 units (VL02N).
- Goods issue is posted on March 5, 2025 (VL02N).
- Invoice for $1,000 is generated and sent (VF01).
- Customer pays $1,000 on March 10, 2025 (F-28).
- Process is closed.
