Navigate the Order-to-Cash Process Steps

After completing this lesson, you will be able to:

After completing this lesson, you will be able to:

  • Navigate the Order-to-Cash Process Steps

Sales Order Creation

Let's navigate through the order-to cash process step by step. In this example, the sales process starts with the sales order creation.

In general, in SAP S/4HANA Sales you can sell services or physical products that you have in stock or manufacture yourself.

In the simulation we focus on the sales process material from stock. Just like before, the simulation runs like a video that pauses occasionally to give additional explanation. To continue the demo, click on the arrow in the explanation box.

In the demonstration of the course you will take over different roles as you navigate through the order-to cash process step by step. At first you are in the role of our sales rep, Sally while watching this demonstration,

Watch Sally creating a sales order.

Structure of Sales Documents

In this section, you learn about the sales document structure and its level, header, item, and schedule line. You also see the structure of sales documents in SAP S/4HANA when our sales rep, Sally reviews the order she created.

Sales Order Sourcing

Before the ordered material can be delivered to the customer, it has to be sourced. The way in which a material is sourced can depend on the material itself as well as on the sales transaction.

The material can be sourced as follows:

  • Directly from stock

  • By replenishment from a vendor (via a purchase requisition or a purchase order)

  • By replenishment through own production (via a planned order or a production order)

The figure, Sourcing, covers the integration of materials management functions within the sales and distribution process.

During sales order creation, everything happens at once. Now review the previous sales order and learn about the sales document structure as well as the sourcing. Could inventory sourcing confirm the ordered quantity?

Watch Sally reviewing the sales document structure and the integration of inventory management.

Shipping process

When the sourcing of the requested material is confirmed, shipping processing can begin. In SAP S/4HANA, the creation of outbound deliveries is the first step in the shipping process. The outbound delivery controls, supports, and monitors numerous process steps, such as the following:

  • Picking and confirming via warehouse management functions (optional)

  • Packing (optional)

  • Transport planning and monitoring via shipment documents (optional) or via freight orders in SAP S/4HANA Transportation Management (optional)

  • Posting the goods issue

To hear Marc in shipping explain his daily tasks, choose play.

The simulation combines the delivery processing and the update of the process in sales. The simulation starts with view point of Sally Sales and afterward Marc continues with delivery creation and the picking process.

Watch Marc executing the shipping process.

The outbound delivery forms the basis of goods issue posting. The data required for goods issue posting is copied from the outbound delivery into the goods issue document, which cannot be changed manually. Any changes must be made in the outbound delivery itself. In this way, you can be sure that the goods issue document is an accurate reflection of the outbound delivery.

Posting the goods issue changes the quantity and the value of the goods in stock. Value-based changes are made to the relevant balance sheet accounts in financial accounting.

Watch how Marc posts goods issue and how the integration of shipping into inventory management is carried out .

Billing process

After the shipping process has been completed, the billing documents can be created. This can be done with reference to one or more outbound deliveries (when selling physical products) or with reference to sales orders (when selling services). In both cases, the relevant information is copied from the preceding documents into the billing document. The billing document serves as a data source for financial accounting, to help you monitor and process customer payments.

Typically, when a billing document is created, the general ledger accounts are determined automatically and the relevant data is posted. The system creates the following postings:

  • A debit posting on the customer’s receivables account

  • A credit posting on the revenue account

To hear Alex in billing explain his daily tasks, choose play.

This simulation shows how a customer is invoiced and that the data gets automatically transferred into accounting.

Watch Alex executing the billing process.

Payment in Finance

In this section, you see what the process looks like from the point of view of the accountant and how a payment is posted.


Strictly speaking, recording incoming payments is not part of the core sales and distribution process. Nevertheless, if you check the line of credit for your customers during order creation, the standard sales process can be affected by unpaid invoices.

To hear Lisa in Accounting explain her daily tasks, choose play.

How is the incoming payment from the customer recorded in accounting?

Watch Lisa in accounting post the incoming customer payment.

Integration of sales - overview within the company

Here are some examples for the integration of other functional areas and components.

Discover the Process Flow

Throughout the different steps in SAP S/4HANA Sales process, the process flow is the link between all documents and across functional areas, such as sales and accounting.

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