Order to Cash (O2C) Finance Process in SAP
■ Real-Time Business Case
ABC Electronics Ltd. sells industrial automation equipment. Customer XYZ Manufacturing Co. places an order for 20
industrial sensors priced at $200 each.
1. Pre-Sales Activities (Optional)
Customer inquiry, product details, quotation, negotiation.
SAP T-Code: VA11 – Create Quotation
Example: Quotation #1001001 for 20 sensors at $200 each.
2. Sales Order Creation
Customer confirms the quote → Sales order is created.
SAP T-Code: VA01 – Create Sales Order
Example: Sales Order #5000101 for $4,000.
3. Credit Check
System checks credit limit before confirming the order.
SAP T-Code: FD32 – Check customer credit exposure
Example: Credit limit $20,000; order approved.
4. Outbound Delivery Creation
Create delivery document and initiate logistics.
SAP T-Code: VL01N – Create Outbound Delivery
Example: Delivery #8002001 for 20 sensors.
5. Goods Issue
Goods leave warehouse, inventory reduced.
SAP T-Code: VL02N – Post Goods Issue
FI Entry: Dr COGS / Cr Inventory
Example: COGS = $2,500.
6. Billing / Invoice Creation
Invoice generated and customer billed.
SAP T-Code: VF01 – Create Billing Document
FI Entry: Dr A/R / Cr Revenue, Tax
Example: Invoice #9003001 = $4,400.
7. Accounts Receivable (FI-AR) Posting
Customer receivable booked in FI.
SAP T-Code: FBL5N – Display Customer Line Items
Example: XYZ owes $4,400.
8. Incoming Payment (Cash Application)
Customer pays invoice; A/R cleared.
SAP T-Code: F-28 – Post Incoming Payment
FI Entry: Dr Bank / Cr A/R
Example: Payment of $4,400 received.
9. Dunning (Optional)
If delayed, reminders are sent.
SAP T-Code: F150 – Dunning Run
Example: Dunning notice after 30 days.
■ Summary of SAP T-Codes in O2C Process
Step Description SAP T-Code
1 Create Quotation VA11
2 Create Sales Order VA01
3 Check Credit Limit FD32
4 Create Outbound Delivery VL01N
5 Post Goods Issue VL02N
6 Create Billing Document VF01
7 Customer Line Items FBL5N
8 Post Customer Payment F-28
9 Send Payment Reminders F150
■ SAP Modules Involved
SD: Handles Sales Order, Delivery, Billing
FI: Manages Accounting, A/R, Cash Receipt
MM: Tracks Inventory during Goods Issue
CO: Cost of Goods Sold, Profitability Analysis
■ Integration Points
• SD to FI: Billing posts accounting entries
• SD to MM: Goods issue updates inventory
• FI to CO: COGS flows to profitability analysis
