Order-to-cash walk-through

With 100 alternators in stock in plant 1710, Contoso's inside sales team takes an order from Great Lakes Fleet Services for 50 units. This leg turns finished goods into revenue and cash.

Sales order50 CMC-ALT-100 at 250.00 USD, sales area 1710 / 10 / 00
Outbound deliveryShipping point for plant 1710 creates the delivery
Picking and goods issueWarehouse picks 50 and posts goods issue
BillingInvoice for 12,500.00 USD
Incoming paymentCustomer pays; receivable cleared

Sell from stock for the alternator.

Step by step

Step	Role	SAP GUI	Fiori app (examples)	Document created
Create sales order	Internal sales representative	VA01	Manage Sales Orders / Create Sales Orders	Sales order
Create delivery	Shipping specialist	VL01N	Create Outbound Deliveries	Outbound delivery
Pick and post goods issue	Warehouse clerk / shipping specialist	VL02N	Manage Outbound Deliveries	Material document + journal entry
Create billing document	Billing clerk	VF01 / VF04	Create Billing Documents	Billing document + journal entry
Post incoming payment	Accounts receivable accountant	F-28	Post Incoming Payments / Clear Incoming Payments	Payment journal entry (clearing)

Order-to-cash steps, roles and tools. App names vary by release.

Checks at order entry

When the order is saved, SAP runs checks that are themselves hand-offs from other teams: the availability check (does plant 1710 have, or will it have, 50 alternators?), pricing (from the condition records), and often a credit check against the customer's credit limit. The order confirms 50 for the requested date only if stock or planned receipts cover it, which links straight back to the production leg you just finished.

Revenue and cost of goods sold in the same journal

Two documents in this leg post to finance, and together they show the margin:

Event	Debit	Credit	Amount (USD)
Goods issue of 50 alternators	Cost of goods sold	Finished goods inventory	8,000.00
Billing of 50 alternators	Customer receivable	Revenue	12,500.00
Incoming payment	Bank	Customer receivable (cleared)	12,500.00

Journal entries in the order-to-cash leg (tax omitted).

Both the cost of goods sold line and the revenue line carry the same product, customer, sales organization, profit center and segment. Because they sit in the same Universal Journal, margin analysis can show the gross margin of 4,500.00 USD for this customer and product without any extra reconciliation. In some configurations, cost of goods sold is also split into its cost components or adjusted when the revenue is recognized; ask your controller which approach Contoso uses.

Pricing, tax and credit at a glance

Three determinations happen silently when the order is saved, and each is owned by someone else. Pricing finds the base price condition for CMC-ALT-100 and any discounts or surcharges; if no valid price exists, the order is incomplete. Tax is determined from the ship-from and ship-to locations and the customer and product tax classifications; US sales tax is often calculated by an external tax engine, so a missing tax line can be an interface problem rather than an SAP one. Credit management checks the customer's exposure against the limit maintained for the business partner; an order over the limit is blocked until a credit analyst releases it. In a tour, note each of these on the order before moving on, because the invoice will copy them.

Shipping and payment details

The delivery is created for a shipping point determined from the plant, the shipping conditions and the loading group. Picking may be a simple quantity confirmation or a full warehouse task, depending on your warehouse setup. Goods issue is the moment ownership and value leave Contoso's stock in the system. Billing is usually run as a batch from the billing due list rather than one document at a time. Finally, when Great Lakes Fleet Services pays, the accounts receivable accountant posts the payment and clears it against the open invoice item. Many companies automate this from the bank statement; a payment that cannot be matched stays on account and the invoice remains open.

What would you do?

In the tour, the sales order for 50 alternators saves, but the confirmed quantity is zero and the requested date cannot be met. Stock overview shows 100 alternators in plant 1710. What is the most useful next step?

Key points