Every MSME owner knows the gap between making a sale and having the money. The goods leave on Monday, the bill follows, and the payment arrives 60 or 90 days later, if it arrives on time. That journey from order to cash is now at the centre of a national proposal from NPCI Bharat BillPay and Bain & Company, which argue that connecting invoices, payments, reconciliation and financing on one digital layer could help close India's ₹60 lakh crore MSME credit gap.
Key takeaways
- Order to cash (O2C) is the full journey from a customer order to money in your bank, recorded in your books.
- A September 2026 report by NPCI Bharat BillPay and Bain & Company puts the MSME formal credit gap at about ₹60 lakh crore, with about ₹8.1 lakh crore of MSME receivables stuck in delayed payments.
- It proposes a shared digital layer where buyer-confirmed invoices become records lenders can finance, so credit follows cash flow rather than only collateral.
- You do not need to wait for it. Clean e-invoices, fast reconciliation and a tracked DSO already make a business easier to fund.
What order to cash means
Order to cash, usually shortened to O2C, covers everything that happens between a customer placing an order and the payment being received and recorded. IBM describes it as a process that runs across sales, credit, logistics and accounts receivable, with one goal: shorten the time between receiving an order and getting paid.
It is the mirror image of procure to pay (P2P), which manages what you buy and pay out. O2C is about money coming in. For any business selling on credit, it decides whether strong sales become a healthy bank balance or a pile of unpaid bills.
The eight steps, in an Indian MSME
- 11. Order
A purchase order arrives by email, WhatsApp or a buyer portal. Price, quantity, discount and delivery terms are confirmed.
- 22. Credit check
You decide how much credit this buyer gets and for how long.
- 33. Fulfilment
Goods are picked, packed and checked, and stock records are updated.
- 44. Dispatch
An e-way bill is generated where needed, the goods are shipped and proof of delivery is collected.
- 55. Invoice
A GST invoice is raised. Businesses above ₹5 crore turnover must report it to the Invoice Registration Portal to get an IRN.
- 66. Receivables
The amount sits in your books as money owed.
- 77. Collection and reconciliation
Payment arrives by NEFT, RTGS, UPI or cheque, often in part or in bulk, and has to be matched to the right invoices.
- 88. Reporting
You review collection days, overdue amounts and cash flow, and decide what to change.
Where the cash gets stuck
Most O2C problems do not happen inside a step. They happen in the gaps between steps, where information is retyped, emailed or lost. In our work with MSMEs, the same five leaks come up again and again:
- Invoices raised late. Dispatch happens on Friday, the bill goes out the following Wednesday, and the credit period starts five days late.
- Disputes found late. A short delivery or a wrong rate surfaces only when the buyer refuses to pay on day 60.
- Unmatched payments. A buyer pays ₹4,73,000 against six invoices with no reference, and someone spends a day working out which bills are closed.
- No one chasing. Follow-up depends on the owner remembering, so large buyers stretch terms without a reminder.
- Books that do not agree. Your ledger, the GST portal and the buyer's records show three different balances, which also slows every loan application.
The NPCI Bharat BillPay and Bain report makes the same point at national scale: the challenge is "increasingly one of fragmented information flows rather than a lack of digital infrastructure." India already has GST e-invoicing, UPI and account aggregators. What it lacks is a common thread that ties one invoice to its payment and to the loan that could be raised against it.
What NPCI Bharat BillPay and Bain propose
In India's Next Growth Frontier: B2B Commerce, Payments and Credit, released at the Global Fintech Fest on 11 September 2026, NPCI Bharat BillPay (NBBL) and Bain & Company propose a centralised, interoperable digital layer for business-to-business trade. In plain terms, it would do four things:
- Digitise the full order-to-cash cycle through standard APIs, so an ERP, a billing app and a bank can talk to each other without custom integration.
- Automate reconciliation across the more than 20 crore GST e-invoices generated every month.
- Let buyers confirm invoices on the network, turning them into trusted, financeable records.
- Give lenders the transaction history to assess a borrower on the strength of its cash flows, not only on property or other collateral.
The longer-term vision is an "India B2B operating system", run by a neutral, regulated entity, much as UPI is. NBBL's own network, Bharat Connect for Business, is an early piece of this. Central Bank of India, Axis Bank and BharatNXT are among those already live on it.
Why a buyer-confirmed invoice changes lending
Today, a bank looking at a small supplier sees a balance sheet, a bank statement and, usually, a request for collateral. It cannot easily tell whether a ₹10 lakh invoice to a large buyer is real, accepted and likely to be paid.
When the buyer confirms that invoice on a shared network, the risk shifts. The lender is no longer judging only the small supplier; it is also looking at a confirmed obligation of the buyer. This is the idea behind TReDS, where companies with turnover above ₹250 crore must now register. A national O2C layer would bring the same logic to far more invoices, including those of buyers who are not on TReDS.
| Today | With a shared O2C layer | |
|---|---|---|
| Proof of sale | PDF invoice, emailed | E-invoice confirmed by the buyer on the network |
| Matching payments | Manual, from bank statements | Automatic, invoice to payment |
| What the lender sees | Balance sheet and collateral | Live sales, collections and buyer quality |
| Typical outcome | Smaller limit, property asked for | Credit sized to confirmed receivables |
Five numbers every MSME should track
You cannot improve what you do not measure. Review these five every month.
| Measure | How to work it out | What it tells you |
|---|---|---|
| Days sales outstanding (DSO) | Receivables ÷ credit sales for the period × days in the period | How long, on average, customers take to pay |
| Overdue share | Receivables past due date ÷ total receivables | How much of your money is already late |
| Collection effectiveness index (CEI) | Amount collected in the period ÷ amount that was collectable | How well your follow-up works |
| Cash conversion cycle (CCC) | Inventory days + DSO − days you take to pay suppliers | How long your cash is tied up in each rupee of sales |
| Invoice lag | Days between dispatch and invoice | Delay you add before the credit clock even starts |
A quick example
A trader made ₹90 lakh of credit sales in the last quarter (90 days) and has ₹45 lakh still to collect. DSO = 45 ÷ 90 × 90 = 45 days. Average daily sales are ₹1 lakh, so cutting DSO from 45 to 30 days releases about ₹15 lakh of cash, without borrowing a rupee.
What to do now, before the national layer arrives
A national O2C rail will take years to reach every business. Firms with clean records will benefit first. Start here:
An order-to-cash checklist
- Invoice on the day of dispatch. Use one invoice series, issue e-invoices where they apply, and send every buyer a PDF with your bank and UPI details on it.
- Write credit terms into every purchase order: the credit period, the late-payment interest and who confirms receipt of goods.
- Ask buyers to quote invoice numbers with every payment, and reconcile your bank statement against open invoices every week, not at year end.
- Match your sales register with GSTR-1 and your buyers' GSTR-2B every month. Mismatches are early warnings of disputes.
- Use the law in your favour. If you are a micro or small enterprise with Udyam registration, buyers must pay within the agreed period and never later than 45 days; they also lose the income-tax deduction for late payments. Register unpaid claims on MSME Samadhaan if needed.
- Register on a TReDS platform and ask your large buyers to accept invoices there, so you can discount them when cash is short.
How Brydgework can help
Our Financial Solutions practice works with MSMEs on exactly this chain: invoicing and GST discipline, collections, working-capital planning and preparing loan-ready files for banks and NBFCs. If you want a quick start, our free tools run in your browser: the GST invoice generator, the GST reconciliation tool for matching your books with GSTR-2B, and the business health check, which estimates how much a lender may offer you and what to fix first.
The national plumbing is coming. Businesses whose invoices, payments and books already agree will be the first to turn their sales into credit. Talk to us if you want help getting there.
What is order to cash (O2C)?
How do I calculate days sales outstanding (DSO)?
What has NPCI Bharat BillPay proposed for MSMEs?
What is Bharat Connect for Business?
How quickly must buyers pay a micro or small enterprise?
References
- IBM Think: What is order to cash (O2C)?
- Bain & Company and NPCI Bharat BillPay: India's Next Growth Frontier: B2B Commerce, Payments and Credit (11 September 2026)
- KNN India: NBBL proposes unified digital system to connect MSME invoicing, payments and financing (12 September 2026)
- Outlook Business: Centralised interoperable digital layer can help bridge ₹60 lakh crore MSME credit gap
- Telangana Today: Central Bank of India launches Bharat Connect for Business
- Singhania & Co.: Mandatory TReDS registration for companies above ₹250 crore turnover
- Ministry of MSME: MSME Samadhaan, delayed payment monitoring
- The Times of India (Times News Network): "Report: MSMEs need digital infra", print edition, September 2026
