What is order-to-cash?
Order-to-cash is the whole run from work being done to the money arriving — on a project, from site execution through measurement, certification and invoicing to receipt.
Also called O2C.
Order-to-cash in plain words
It is the process the receivable lives inside. Mining it end to end shows which of its stages holds the cash: usually certification rather than the client's payment run, which is where everybody looks first.
Order-to-cash: a worked example
Where 94 days sit on one project's order-to-cash.
- Work executed → joint measurement
- 1.2 d
- Measurement → RA bill submitted
- 2.1 d
- RA bill → client review
- 23.4 d
- Certified → tax invoice
- 6.0 d
- Invoice → payment received
- 41 d
- Total
- about 94 days, of which 32 are yours
Measured only from invoice to receipt, this process looks like 41 days. The 32 days inside your own billing and certification chain never appear.
Why does order-to-cash matter?
It is the largest single pool of trapped cash on most projects, and the one where a fortnight can be recovered without asking a client for anything.
Where does order-to-cash mislead?
Order-to-cash is often measured from invoice to receipt, which is the last third of it. Measured that way, the two thirds where the delay actually is never appear.
What do people get wrong about order-to-cash?
- Starting the clock at the invoice
- It hides the two thirds of the process you control. It is also the version most ERPs report by default.
- Blaming the client first
- On most projects the largest single wait is internal certification or measurement, not the client's payment run. Mine it before the meeting.
How does Crestline measure order-to-cash?
Crestline mines order-to-cash from execution rather than from the invoice, so the internal delay before billing is visible next to the client's payment behaviour and the two can be argued about separately.
The order-to-cash lens