What is Order-to-Cash Cycle?
The order-to-cash (O2C) cycle covers all the steps a business performs from the moment a customer places an order until the corresponding payment is received and reconciled. It spans order capture, credit check, fulfillment, shipping, billing, accounts receivable, collections, and cash application. Optimizing O2C reduces days sales outstanding (DSO) and improves working capital.
How It Works
- Order capture and credit check.
- Order fulfillment and shipping.
- Invoice generation (tax-compliant under ZATCA e-invoicing).
- Accounts receivable management and dunning.
- Cash receipt, application against invoice, and reconciliation.
Saudi Context
Saudi B2B sellers face long collection cycles, especially with government and contractor customers. ZATCA’s e-invoicing accelerates the invoicing step, but collection bottlenecks persist. SAMA-regulated factoring providers and Kafalah-backed receivable financing help SMEs bridge the O2C gap. Qoyod automates O2C end-to-end through integrated sales, inventory, and AR modules.
Example
A wholesaler receives an order on day 1, ships on day 3, issues a ZATCA-cleared tax invoice on day 4, and collects payment on day 53. The 53-day O2C drives DSO of around 53 days, an important working capital metric the CFO monitors weekly.