The Quote-to-Cash Process

Quote to Cash Process

Quote-to-Cash (QTC) processes do not only include salespeople creating quotes and organizations at the other end banking and confirming the transaction and passing it on to different systems for provisioning and fulfillment. A best-of-breed quote-to-cash solution includes several sales, account management, order fulfillment, billing, and account receivables functions. As the name “quote-to-cash” suggests, it makes it easy for your sales teams to deliver the configuration of products and services to best suit your customers’ requirements. QTC includes the creation of a quote and drafting a proposal for your customers, all the way to when payment is received for services rendered.

Obviously, these customer-driven tasks are related and should be integrated in one business process that is best facilitated with a software solution. A quote-to-cash solution assists in creating a single platform where information related to customers can be gathered, processed, and kept up to date. Updates must ideally be made in real-time so sales reps are better equipped with accurate data, enhanced reporting capabilities, and are able to engage clients more effectively.

What is the quote-to-cash process?

The quote-to-cash process comprises functions related to sales activity for your business; start-to-finish. As a general rule, configuring offers according to the client’s requirements marks the start of the quote-to-cash process. Some sales activities take place along with marketing functions even earlier in the buying funnel – like cold calling, prospecting, inbound sales activities, and so on. The opportunity to deliver a quote, however, is still typically seen as the first measurable, concrete QTC function.

The QTC process includes up until the cash for the deal being referred to has been gathered and distributed, and the data for all steps of the process has been banked for analysis and for the process improvement, potentially leveraging ML and AI. With the advent of changing solutions from one-time to recurring, the process is never really over. Not many people recognize this moment to be, infact, the true endpoint of the sales process; it’s not the moment the customer consents to place an order. Eventhough this action indicates that a deal has closed and income can be recorded, the sales process itself is unfinished until the cash has been applied and the entire cycle can be reported and analyzed. The deals now new recurring aspects have changed some of the dynamics of legacy QTC, which is now more Revenue Lifecycle Management (RLM).

Streamline QTC with Technology

Best-of-breed solutions help future-proof your organization and your customers from risks associated with vendor lock-in. Best of breed CPQ or QTC solution should work or integrate with all the leading CRMs and enterprise systems because the need for quote-to-cash will not change; but organizations will change platforms and a best-of-breed approach allows you to mitigate these future changes to minimize disruption and maximize results and revenues.

Successfully implementing a CPQ solution can make it very easy for you to manage all the independent actions of the quote-to-cash cycle. This empowers your salespeople to convey accurate information to clients faster, minimize order and invoicing errors, and refine your data analysis and forecasting efforts.

Complex Configurations Made Easy

Curating quotes that are guaranteed to be accepted is a pre-requisite to generating deals that are guaranteed to be signed. However this is rarely true. What is important in this case, is that the solution must be easy to modify, change and update to capture the needs, requests and insight from your customer negotiation in order to get them a quote that they can close out quickly.

Ease of use is a fundamental part of user experience. As IBM put it, “Ease of use may be invisible, but its absence sure isn’t.”servicePath prioritizes ease of use and goes an extra mile in ensuring that the usability of our CPQ+ platform is top notch. We’ve been awarded by G2 several times for our Ease of Use.

CPQ platforms like servicePath CPQ+ enable your business to succeed by facilitating the creation of quotes that are accurate, and tailor-made according to your customer’s requirements; with minimum resources involved and minimum time spent.

Configuration is the first step that your salesperson takes towards building a quote for the client. This step is a crucial one because any mistakes made here can either make or break your deal. Time consuming processes like configuration are so critical to your deal because, what if you’re taking too long to get a quote out? Or if its poorly configured and doesn’t make sense; or even if it is poorly presented and does not conform to the standards set by your customer? All these factors play a huge role in the fate of your proposal.

When configuring using outdated/manual tools, salespeople have to dig into hefty spreadsheets and product databases one at a time to find the information that they need. Cutting and pasting of spreadsheets into word documents carry the risk of inconsistency in branding. There is a marketing debt from poorly integrated QTC solutions that don’t look professional in addition to being fraught with errors. Since the data was most probably populated earlier manually, inconsistency is very likely. Salespeople are then left to only rely on their best judgment and deliver customer quotes in a timely manner; and this often results in inconsistencies and errors.

It is imperative to use and a CPQ tool that has the ability to accelerate the front-end of the process for the organization, as well as its customers, while imposing a series of controls to guarantee consistency and quality is considered to completely enhance the deal-making process.

Put a Price Tag on Your Offering

Not all proposals get accepted the first time – take marriage proposals for instance! Did you know that only about 60% of marriage proposals get accepted?! That’s 40% hearts broken. Not just that, companies too often suffer from rejections; 17% of job offers are rejected!

According to 7 tips to make your sales proposal unforgettable – RFP360, opportunities that make it to the sales proposal phase have a win rate of 47%. Another study showed that only about 34% of all sales quotes end with a purchase. These sales are made by only those who are thorough, accurate, and timely with their sales quotes. Step 2 is to price right.

Muddled pricing models can cause salespeople to deliver quotes that are full of errors. With the evolution of technology, currencies, products, and buyers and sellers, the quote creation process is not as simple as one would expect. Layered with various pricing structures, discounts, grouped items, bundled products, add-ons, and other price fluctuations, it can become difficult to develop quotes manually. Quoting and selling become even more cumbersome when customers request adjustments to order quantities.

Your salespeople may still misquote clients, even if your pricing structures are not that complex; and this can put your relationship with your prospects at a great risk. It is imperative to keep the sales reps up to date on products, but they still have to be laser focused on delivering sustained customer value. Salespeople should not be expected to memorize every single number for every SKU in your product database. The need for salespeople is to understand how your solutions and products solve the challenges and requirements of their customers and be able to demonstrate and discuss how their solutions will alleviate these challenges. Your CPQ and QTC solutions should be tuned to help salespeople identify these needs and challenges of customers and create configurations and solutions quickly that have been pre-vetted by the pre-sales architects to reduce risk and accelerate time to close. Research shows that the vendor who responds first, gets the sale. It is therefore crucial that the sales team be prepared to quickly deliver an accurate quote.

When you employ a QTC solution like servicePath CPQ+, your sales team is free to engage the customer with an accurate quote confidently and quickly. Real time and detailed updates are made to the pricing information, throughout your systems. This means you never have to worry about your customers receiving inaccurate information. Never “too little, too late”.

Develop Proposals and Agreements that Reflect your Branding and Vision - 100% of the time

Got all the numbers worked out? It’s time to send over the proposal. The process of manually creating a proposal may just appear to be a formality now. Are these innately free of errors? Definitely not; in fact, the opposite is true. If you’re planning to do it completely manually, you run the risk of producing documents with errors. Typos, for instance, are a very frequent occurrence in our lives; and they prevent the client from signing the deal without a revision. Even simple formatting inconsistencies or incorrect attachments can be the reason you missed the ball – or, in some cases, if your client is generous enough, you may have to return again with a new proposal. While these errors may not seem like much in isolation, they can tarnish the credibility of your salespeople and your business.

Incorporating automated proposals helps ensure that every proposal and contract that you create is consistent, and per the standards required to complete the sale. Automation enables you to create dynamic proposals and contracts that are built from several distinct data points.

Process the 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.

When your client consents to the terms, do you have to enter the data into an entirely separate system before it qualifies as a valid order? Best-of-breed QTC and CPQ systems like servicePath integrate seamlessly with the best CRMs; In a best-of-breed solution, your CPQ can go either to an in-house billing platform, or leverage an integration into a billing system. Some platforms have their own billing solutions or an option to leverage your incumbent billing solution via an API integration.

Don’t stop selling - Order Renewals and Subscriptions

As mentioned above, QTC is no longer a one-time transaction – its an ongoing sales cycle with recurring revenues and solutions that dynamically change under the covers. Gone are the days where you would just buy an IBM AS400 and then it would die and then you would go buy a new one. In the cloud today, things continue to exist and get upgraded/renewed/regraded – its no longer a finite relationship; these relationships are becoming infinite.

Once a purchase is completed, salespeople look for cross-selling and renewal opportunities. If attempted manually, salespeople would have to initiate the quote process right from the beginning if the prices change, add-ons are requested or the renewal order is updated. This method then is vulnerable to errors and will lead to potential delays.

According to a 2022 HubSpot Blog survey of more than 500 sales professionals, 72% of salespeople who upsell and 74% who cross-sell say that it drives up to 30% of their revenue.

Luckily, we’re living in a digital era; where most, if not all, processes can be executed using automated tools. Innovative CPQ and quote-to-cash software enables users to apply terms and conditions to other products for cross-selling quickly. Creating renewal quotes based on existing order data in the system is also no longer a problem. Salespeople can ensure their customers get precise cost projections when negotiating, and are able to plan future expenses.

Subscriptions are no easy feat, but they should be. Keeping track of subscription parameters and deadlines that are unique to each client manually is a huge challenge in itself. Advanced RLM/CPQ solutions like servicePath CPQ enable superior subscription management functions; your sales team can then maximize the lifetime value of each client.

Send the Invoice, Collect Payment, and Allocate Cash

Invoicing and other accounting functions are all integrated alongside the sales, order fulfillment, and analysis tasks within a QTC solution. The instant an order is modified in the system, real-time data is immediately made available for any department to access. This enables accounts receivable personnel to generate accurate invoices as soon as the order is placed; without having to dig into and understand the complexities of the sales process. The result is optimum efficiency and collaborative forecasting.

Analyze QTC Data and Create Cash and Budget Forecasts

The quote-to-cash process is not a simple one – its an aggregation of several disparate organizational functions that require a significant amount of thorough diligence themselves. Each step within the process is infused with complexities. Small actions on one end of the continuum have large impacts in other areas. Moreover, various departments and employees need to track down ways of managing the process in a coherent manner, so you can get the most value out of it.

Data reporting and analysis across each step of a sale became possible only with the advent of automated QTC technology. Performance data was better suited to enhancing singular functions in QTC, such as order management and invoicing.

Today, however, it is possible to track and holistically analyze the several performance metrics throughout the quote to cash process, without having to hop from system to system. You can liberate your metrics from their self-contained boxes so that you can yield maximum value to each unit that partakes in QTC, and to the organization as a whole.

Organizations that correctly implement and utilize the CPQ and QTC tools will see remarkable, and company-wide improvements.

Enhanced internal communications
Greater productivity
Fewer proposal errors
Faster order fulfillment and billing
Increased customer satisfaction.

Ultimately, technologies like automated QTC and CPQ systems help users sell faster, and deliver quality customer experience easier.
CPQ and QTC solutions give you the ability to do demand forecasting for products, services and capital requirement before the deal is actually closed. This allows organizations to understand if they have enough inventory or resources to fulfill the pipeline of opportunties progressing or highlight potential risks and needs, and lead times for specific products in order to win deals and drive more revenue.

Teams that incorporate the right quote-to-cash tools in their processes will reap several benefits and see various organizational improvements:

Enhanced internal communications
Increased productivity
Dramatic reduction in proposal errors
Acceleration of the order fulfillment and billing processes, and
An overall increase in customer satisfaction.

The QTC process, at the end of the day, enables organizations to provide their customers with a quality customer experience.

Get in touch with one of our representatives today and find out what QTC can do for your business.

What is the quote-to-cash process?

Streamline QTC with Technology

Complex Configurations Made Easy

Put a Price Tag on Your Offering

Develop Proposals and Agreements that Reflect your Branding and Vision - 100% of the time

Process the Order

Don’t stop selling - Order Renewals and Subscriptions

Send the Invoice, Collect Payment, and Allocate Cash

Analyze QTC Data and Create Cash and Budget Forecasts

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