The Basics of the Quote-to-Cash Process

By Danny Wong

The quote-to-cash (QTC) process encompasses many sales, account management, order fulfillment, billing, and accounts receivables functions. It considers the steps taken as your sales team configures a quote and drafts a proposal for a client, through to when payment is received for services rendered.

Of course, these customer-centric tasks are interdependent and should be tied together in a single business process that is best facilitated with software. A QTC solution also helps to create a single platform in which customer data can be collected, processed, and updated in real time to empower sales reps to engage clients more effectively, reduce errors, and improve reporting capabilities.

What is the quote-to-cash process?

The quote-to-cash process covers the end-to-end functions related to sales activity for your organization. Typically, configuring offers for a prospect is listed as the first true step of the QTC process. While there are often some sales activities that occur along with marketing functions even earlier in the buying funnel—cold calling, prospecting, inbound sales activities, and so forth—the opportunity to deliver a quote is generally seen as the first measurable, concrete QTC function.

The QTC process then spans all the way until the cash for the sale in question has been collected and allocated, and the data for all points of the process has been analyzed and used to enhance performance. It’s important to distinguish this endpoint from the moment when many people assume the sales process is over: the moment the customer agrees to place an order. Although this action denotes that a sale has closed and revenue can be recorded, the sales process itself is not complete until the cash has been applied and the entire cycle can be reported and analyzed.

Streamline QTC with Technology

Integrated QTC software can improve your chances of successful sales and collections.

By employing a QTC solution, you can easily manage all the independent actions that make up the quote-to-cash cycle. This enables your salespeople to deliver accurate information to clients quickly, minimize order and invoicing errors, and improve your data analysis and forecasting efforts.

Start by Configuring the Sales Offer

The earliest stage of the QTC process is broken down as Configure, Price, Quote (CPQ). It kicks off with configuration, which is when a salesperson takes the first action toward building a quote for a client. It’s a crucial phase of the process because any inconsistencies that make their way into the quote at this early stage can be costly down the line.

In outdated, manual configuration processes, sales reps have to comb through spreadsheets and product databases one by one to find the information they need. Since records are often input manually, there can be multiple entries for a specific product with conflicting information. This leaves salespeople to rely on their best judgment to deliver customer quotes in a timely manner, and often results in inconsistencies and errors.

Automated QTC software takes the guesswork out of configuration for salespeople. It accelerates the front end of the process for the organization and the customers and imposes a series of controls to ensure consistency and quality.

Then Develop the Offer Price and Project Quote

Research indicates that 66 percent of all sales quotes end without a purchase. Salespeople can beat these odds when they are thorough, accurate, and timely with their sales quotes.

Complicated pricing structures, however, can cause salespeople to deliver error-laden quotes. When layered with discounts, grouped items, bundles, add-ons, and other price fluctuations, quote development can become difficult to handle manually. When clients request adjustments to order quantities, the process becomes even more cumbersome.

Even if your pricing structure is relatively simple, there is still a chance your salespeople may misquote clients, which can compromise their relationship with a prospect. Sales reps should always be up to date on their product education, but they have to place the bulk of their focus on delivering sustained customer value. It’s not feasible for them to memorize every single discount scenario for every SKU in your product line. Studies show that sales generally go to the vendor that responds first. Therefore, sales teams must be ready to deliver an accurate quote quickly.

When you employ a QTC solution, your salespeople are free to engage the customer with a quote confidently and in an instant. Detailed pricing information is updated in real time throughout your systems, so you can always be confident that your customers will receive accurate information.

Craft the Proposal and Agreement

Once you have all the numbers worked out, it may seem like the process of manually creating a proposal is just a formality. However, you still run the risk of producing documents with errors. Typos happen, for instance, and they often happen in a way that prevents the client from signing without a revision. Even simple formatting issues or incorrect attachments can be the difference between closing a deal immediately and having to return again with a new proposal. While these errors may not seem like much in isolation, they can erode the credibility of your salespeople and your organization.

By incorporating automated proposals into your QTC process, you ensure that every proposal and subsequent contract meets the standards that are required to complete the sale. It’s not just about plugging in values, since automation enables you to create dynamic proposals that are constructed from hundreds or thousands of distinct data points.

Process the Order

You also have to consider how your sale goes from a proposal to an order.

Once your customer agrees to the terms, does the data have to be entered into a completely different system before it registers as a valid order? QTC software integrates the entire process so that executed proposals and contracts immediately trigger actions on the Finance and fulfillment end.

Continue Selling Through Order Renewals and Subscriptions

In the aftermath of a purchase, salespeople can seek out cross-selling and renewal possibilities.

Manual management of this process requires sales reps to initiate the quote process from scratch if prices change, add-ons are requested, or the renewal order is updated. This, of course, can lead to potential delays and is vulnerable to human error.

Fortunately, innovative quote-to-cash technology allows your salespeople to quickly apply terms and conditions to other products for cross-selling. They can also easily create renewal quotes based on existing order data in the system so customers get accurate cost projections at the negotiating table and can plan for future expenses.

Subscription management is another task that can be overwhelming for sales professionals when they have to juggle a large stable of clients. In situations where the subscription parameters and deadlines are unique to each client, manually keeping track of all of the details in addition to the other sales data is challenging. Consider using a software solution to enable superior subscription management functions. That way your sales team can maximize the lifetime value of each customer.

Send the Invoice, Collect Payment, and Allocate Cash

Before the introduction of QTC management software, companies had to learn and handle separate CRM, order management, and accounting systems. This meant the finance team had to wait and receive the correct data for the order before they could generate invoices. What seems like even minor delays in the invoicing and collection process can cause significant problems with cash flow management. This also makes it more difficult for the finance team to create accurate forecasts.

With a QTC solution, invoicing and other accounting functions are integrated along with the sales, fulfillment, and analysis tasks. Real-time data is available for any department to access the moment an order is modified in the system. Accounts receivable personnel can generate accurate invoices as soon as an order is placed, without needing a detailed understanding of the intricacies of your sales process. This access to real-time, integrated data enables you to minimize collection delays and improve forecasting.

Analyze QTC Data and Create Cash and Budget Forecasts

QTC is a complex process that encompasses many disparate organizational functions. Small actions on one end of the continuum have large impacts in other areas. Furthermore, multiple departments and employees have to find ways to manage the process cohesively in order for you to get the most value out of it.

Before the days of QTC automation, data reporting and analysis across each step was impractical. Performance data was better suited to improving singular functions contained in QTC, such as order management and invoicing.

Now, however, you can simultaneously track and holistically analyze numerous performance metrics throughout the QTC process in one software system. You can free your metrics from their self-contained boxes so that they provide maximum value to every unit that participates in QTC, and to the organization as a whole.

Teams that implement and utilize the right quote-to-cash tools will see improvements in their internal communications and productivity, a reduction in proposal errors, an acceleration of the order fulfillment and billing processes, and an overall increase in customer satisfaction. Ultimately, the QTC process helps make selling and delivering a quality customer experience easier.

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