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Order to cash (OTC or O2C) normally refers to one of the top-level (context level) business processes for receiving and processing customer orders and revenue recognition. . Order to cash is an essential function in finance; the entire cycle of events happens after a customer places an order until the customer pays for the order; that is, the order is converted to c
the Receivables conversion period (or "Days sales outstanding") emerges as interval B→D (i.e.being owed cash→collecting cash) Knowledge of any three of these conversion cycles permits derivation of the fourth (leaving aside the operating cycle , which is just the sum of the inventory conversion period and the receivables conversion period .)
The revenue cycle can be defined as, "all administrative and clinical functions that contribute to the capture, management, and collection of patient service revenue." [ 1 ] It is a cycle that describes and explains the life cycle of a patient (and subsequent revenue and payments) through a typical healthcare encounter from admission ...
Accounts receivable represents money owed by entities to the firm on the sale of products or services on credit. In most business entities, accounts receivable is typically executed by generating an invoice and either mailing or electronically delivering it to the customer, who, in turn, must pay it within an established timeframe, called credit terms [citation needed] or payment terms.
A chart of accounts (COA) is a list of financial accounts and reference numbers, grouped into categories, such as assets, liabilities, equity, revenue and expenses, and used for recording transactions in the organization's general ledger. Accounts may be associated with an identifier (account number) and a caption or header and are coded by ...
The general ledger is usually divided into at least seven main categories: assets, liabilities, owner's equity, revenue, expenses, gains and losses. [6] It is the system of record for an organization’s financial transactions. [ 7 ]
The working capital cycle (WCC), also known as the cash conversion cycle, is the amount of time it takes to turn the net current assets and current liabilities into cash. The longer this cycle, the longer a business is tying up capital in its working capital without earning a return on it.
In accounting, the revenue recognition principle states that revenues are earned and recognized when they are realized or realizable, no matter when cash is received. It is a cornerstone of accrual accounting together with the matching principle .