Opportunity-to-Cash (OTC)

Opportunity-to-Cash (OTC) is the end-to-end business process that spans from identifying a revenue opportunity through to collecting payment. It encompasses sales qualification, deal negotiation, contracting, billing, and accounts receivable—essentially the complete lifecycle of converting a potential customer into realized cash flow.

Why OTC Matters for Revenue Operations

Most organizations track individual stages separately: Sales owns pipeline, Finance owns collections, and Operations manages everything in between. This fragmented view creates blind spots where revenue can leak or stall.

OTC provides visibility across the entire revenue lifecycle. When a sales opportunity closes, that's typically where CRM reporting ends. But the actual work of converting that signed contract into cash involves multiple teams: someone needs to configure billing, generate invoices, process payments, and handle any disputes or delays. Each handoff between teams represents a potential point of friction.

For companies with recurring revenue models, usage-based pricing, or complex billing arrangements, the gap between "deal won" and "cash collected" becomes even more significant.

Core Stages of Opportunity-to-Cash

Opportunity Management

Sales teams identify and qualify potential revenue opportunities. This includes pipeline management, deal scoring, and forecasting. The output is typically a closed-won deal with defined terms.

Quote and Contract

Pricing gets configured based on the customer's needs, which may involve multiple products, volume discounts, custom terms, or usage commitments. Legal and sales collaborate on contract terms. For companies using CPQ (Configure, Price, Quote) systems, this stage involves complex pricing rules and approval workflows.

Order Fulfillment

The signed contract triggers provisioning or service delivery. For software companies, this means activating accounts and granting access. For services businesses, it means scheduling resources and beginning work.

Billing and Invoicing

Finance teams generate invoices based on contract terms. For subscription businesses, this happens on a recurring schedule. Usage-based models require metering and calculation before invoicing. Multi-year contracts may involve complex recognition schedules.

Modern billing platforms like Meteroid handle these complexities by automating invoice generation based on contract terms, usage data, and revenue recognition rules.

Payment Collection

Invoices get sent to customers, payments are processed, and any collection issues are resolved. This stage also includes handling payment failures, dunning, and reconciliation.

OTC vs Order-to-Cash

These terms are sometimes used interchangeably, but they represent different scopes:

Order-to-Cash (O2C) starts when a customer places an order and focuses on the operational execution: order processing, fulfillment, invoicing, and collection. It's primarily an operations and finance function.

Opportunity-to-Cash (OTC) starts earlier in the sales cycle and includes the entire revenue journey from qualified opportunity through to payment. It spans sales, legal, operations, and finance.

For organizations analyzing revenue efficiency, OTC provides the broader view of how effectively potential revenue converts to cash. O2C focuses on execution efficiency once a deal is already won.

Implementation Challenges

System Integration

Most companies use separate systems for CRM (opportunity tracking), CPQ (pricing), ERP (financials), and billing. Data flows between these systems through manual exports, scheduled syncs, or API integrations. When these connections break or lag, teams work from different versions of truth.

Sales may show a deal as closed-won while Finance hasn't received the contract details needed to set up billing. The customer expects service activation but Operations hasn't been notified of the new account.

Process Handoffs

Each stage transition requires clear ownership and communication. Who verifies that contract terms match the quote? Who ensures billing is configured correctly? When payments are late, who contacts the customer—Account Management or Accounts Receivable?

Organizations with unclear RACI (Responsible, Accountable, Consulted, Informed) definitions for these handoffs experience delays and errors.

Revenue Recognition Complexity

For subscription businesses and companies following ASC 606 or IFRS 15, the timing of when revenue can be recognized often differs from when invoices are sent or payments are collected. OTC processes need to track all three: contract value, billed amounts, and cash collected.

A customer may prepay an annual subscription (cash received upfront), but revenue gets recognized monthly over the service period. Usage overages may be consumed in one month but invoiced and collected in the next.

Technology Requirements

An effective OTC process typically involves:

CRM systems (like Salesforce or HubSpot) that track opportunities, deals, and customer relationships. These serve as the starting point for the OTC process.

CPQ tools that handle complex pricing configurations, discount approvals, and quote generation. Companies with multiple products, variable pricing, or channel sales typically need dedicated CPQ capabilities.

Billing platforms that manage recurring invoices, usage metering, and payment collection. For companies with subscription or usage-based models, specialized billing systems like Meteroid provide automation for complex billing scenarios.

ERP systems (like NetSuite or SAP) that serve as the financial system of record, handling general ledger, revenue recognition, and financial reporting.

Integration layer connecting these systems to ensure data consistency and automate handoffs.

When OTC Analysis Provides Value

Organizations benefit most from OTC process optimization when:

Deals involve complex pricing - Multiple products, custom discounting, usage components, or multi-year terms create more opportunities for errors and delays between stages.

Multiple teams touch revenue - When sales, legal, operations, finance, and customer success all play roles in converting opportunities to cash, coordination becomes critical.

Time-to-invoice is slow - If weeks pass between closing a deal and sending the first invoice, examining the OTC process can identify bottlenecks.

Cash flow forecasting is difficult - When finance struggles to predict cash collection timing based on sales pipeline, better OTC visibility helps bridge that gap.

Revenue leakage occurs - If what's sold doesn't match what's billed, or if billing errors are common, OTC process review can identify where breakdowns happen.

Metrics for OTC Performance

Organizations track various metrics across the OTC lifecycle:

Sales velocity measures how quickly opportunities move through pipeline stages. Slow velocity may indicate poor qualification, pricing bottlenecks, or legal delays.

Quote-to-cash cycle time tracks total duration from sending a quote to collecting payment. This end-to-end metric captures cumulative efficiency.

Billing accuracy measures how often invoices match contract terms without requiring corrections. Errors here delay payment and frustrate customers.

Days Sales Outstanding (DSO) tracks average time to collect payment after invoicing. Higher DSO indicates collection challenges or overly generous payment terms.

Win rate by deal complexity helps identify whether certain types of opportunities (by size, product mix, or custom terms) struggle through the OTC process.

Building Better OTC Processes

Document Current State

Map the actual process, not the ideal one. Who does what, which systems are involved, and where do handoffs happen? Identify where deals stall or where data gets manually re-entered.

Define Stage Criteria

Establish clear definitions for when an opportunity moves between stages. What information must be captured? Which approvals are required? Who needs to be notified?

Automate Data Flow

Reduce manual handoffs by integrating systems. When a deal closes in CRM, automatically create the billing configuration. When contracts are signed, trigger invoice generation without manual processing.

Set SLAs

Define expected timeframes for each stage and measure against them. Not every deal needs to move at the same pace, but understanding where delays happen helps prioritize improvements.

Review Exception Handling

Standard deals may flow smoothly, but what happens when a customer wants non-standard payment terms, custom pricing, or contract amendments? Exception processes often reveal where OTC breaks down.

The Revenue Operations Perspective

RevOps teams increasingly own OTC process design and optimization. Their goal is creating predictable, efficient revenue flow from opportunity to cash collection.

This involves balancing competing priorities: Sales wants flexibility to close deals with custom terms, Finance wants standardization for operational efficiency, and customers want simple, accurate billing.

Effective OTC processes provide that flexibility while maintaining controls. Rules-based pricing gives sales approved discount ranges. Automated billing reduces manual work while handling complex scenarios. Integration between systems eliminates data re-entry while preserving audit trails.

For companies scaling revenue operations, investing in OTC process design and the right billing infrastructure becomes a competitive advantage. Organizations that can efficiently convert opportunities to cash can operate with less working capital, forecast more accurately, and scale without proportionally expanding operational headcount.