[Odoo 17] Order to Cash (O2C) Simulation
Hi, Folks!
The Order-to-Cash (O2C) process is fundamental to ensuring that customer orders are fulfilled efficiently and revenue is realised in a timely manner. Using a robust ERP system such as Odoo 17 can streamline this process, especially when dealing with storable products.
🧐 What is the Order to Cash Process?
The Order to Cash process encompasses all the steps involved from the moment a customer places an order until the company receives payment and records the transaction. It includes order management, inventory management, shipping, invoicing, and payment collection.
This article will guide you through the Order to Cash process in Odoo 17 for storable products, highlighting each step and its importance.
📄Scenario
Sun Beauté, a rapidly growing makeup brand, has recently launched a new line of lipsticks called “Radiant Glow.” A boutique beauty retailer, Fin Cosmetics, is interested in purchasing 50 units of these lipsticks.
Sales representative at Sun Beauté sends a quotation to Fin Cosmetics as an offer and Fin Cosmetics will review the quotation and decides to proceed with the purchase. Sales representative at Sun Beauté then confirm the quotation into a sales order. Then, the delivery of goods is processed by the Sun Beauté warehouse according to the number of items ordered. Sun Beauté sales staff will create and send invoices to customers. The customer, Fin Cosmetics, will pay for the order after the product arrives via bank. Finally, Sun Beauté’s Accounting staff will confirm the payment from the customer.
🔧Prerequisites
Before diving into the O2C simulation, ensure the following prerequisites are met:
Install the Required Modules
For this simulation, install or activate the ‘Sales’, ‘Inventory’, and ‘Invoicing’ modules.
Create New Users and Companies
Create 3 new users for Sales, Inventory, and Invoicing. Set access rights according to the role of each user. Create new companies for Sun Beauté and Fin Cosmetics. You can follow this article to create new users and companies.
Create New Products
You can login using admin account and create new product and set the Product Type to ‘Storable’. In this scenario, we can fill in the product details as follows:
Products Name: Radiant Glow Lipsticks
On Hand: 200 units
Unit Price: IDR 70,000
Create a Quotation
Login using Sun Beauté’s Sales account and navigates to the Sales module to create a new quotation.
Fill in the Quotation form with the following details:
- Expiration date: June 4, 2024
- Payment: Immediate Payment
- Products: Radiant Glow Lipsticks
- Quantity: 50 units
- Unit Price: IDR 70,000
Send the quotation to the customer, Fin Cosmetics, by clicking ‘Send by Email’.
Fin Cosmetics will review the quotation and decides to proceed with the purchase. After Fin Cosmetics accept the quotation, the sales representative at Sun Beauté converts the accepted quotation into a confirmed sales order.
💿O2C Simulation
Step 1: Sales Order
Login with Sun Beauté’s Sales staff account and navigates to the Sales module. Head over to the Quotations page on the Orders menu, and select the accepted quotation earlier.
Click the ‘Confirm’ button to create a sales order from the quotation.
Here is the sales order that was successfully created for 50 Radiant Glow Lipsticks.
Step 2: Inventory Check and Allocation
Login with Sun Beauté’s Inventory staff account and navigates to Inventory > Delivery Orders, then select the delivery order that match the previously created sales order.
We can check if the quantity of the ordered product is available by pressing the forecast icon.
There are 200 units of Radiant Glow lipsticks in stock, sufficient to fulfill Fin Cosmetics’ order. Sun Beauté currently have 200 products On Hand and need to send 50 products Outgoing for this delivery order.
The delivery order can be validated by clicking the ‘Validate’ button which will change the delivery order status to ‘Done’ which means the delivery of goods has been made.
Step 3: Invoicing
Login with Sun Beauté’s Sales staff account and navigates to the Sales module. Go to the sales order we made at step 1.
Create invoice by clicking the ‘Create Invoice’ button, set to ‘Regular Invoice’, then click ‘Create Draft Invoice’.
You will see the invoice draft as below.
Step 4: Payment Collection
Login with Sun Beauté’s Accounting staff account and navigates to the Invoicing module, select the matching draft invoice.
Click the ‘Confirm’ button which will convert the draft into an invoice as follows.
Once Fin Cosmetics has made a payment, the Sun Beauté’s Accounting staff can register the payment by clicking the ‘Register Payment’ button.
Fill in the register payment form then click ‘Create Payment’.
Therefore, the invoice has been paid which is marked with a PAID mark as shown below.
🎉Congratulations!
You just completed a simple Order to Cash (O2C) scenario using Odoo 17 including quotation and sales order creation, inventory checking, invoicing, and payment collection.
Feel free to explore another O2C scenario. Happy Odoo-ing!