It wouldn’t be an exaggeration to say quote-to-cash (QTC) dominates the lion’s share of the sales process. A buzzword in CPQ software and sales management, what falls under the QTC umbrella? It’s easy to list surface-level components like configuration, quoting, pricing and billing. In this article, we’ll look at quote-to-cash under the microscope and share the scoop on process steps, benefits, challenges and best practices.

Compare Top CPQ Software Leaders

Article Roadmap

• What Is Quote-To-Cash?
• Steps To Follow
• Benefits
• Best Practices
• Next Steps

What Is Quote-To-Cash?

Quote-to-cash is an end-to-end process that covers the sales cycle from offer configuration to renewals. Typically, it doesn’t include prior marketing taskings like cold-calling and lead management. However, it extends past revenue collection and data analysis to improve future cycles.

Steps in the Process

Like baking a cake, completing the quote-to-cash process involves following tried and true steps to the tee, or you could end up with a recipe for disaster. We drew up the steps, so it’s a cakewalk for you.

Offer Configuration

Getting the customer’s needs recorded, with customizations and the right products, is the first step in the process. There’s a need for speed to ensure delays don’t carry over to pricing and quote creation. Usually, sales reps peruse spreadsheets and old records to create the right configuration, although this can be time-consuming and cause errors to creep in.

Pricing

You’ve gotta make sure the price is correct before you spout off a quote to the client. Depending on your product, you may have complex pricing models and rules to consult before you finalize the cost. Additionally, you may need to add bulk discounts, promotions or taxes.

Quote Creation

Forbes mentions seven seconds as the magic number to make a good first impression. Creating a quote with accurate details, proper branding, professional formatting, and no typos go a long way toward sealing the deal. Collaboration is key during this phase. Clear workflows and traceable changes can speed up the process.

Contract Management

Post quoting, get legal involved so your sale is airtight. Contract management involves negotiating the terms of the sale, drawing up contracts, adding terms and conditions, double-checking for errors and signing on the dotted line.

Order Fulfillment

The next step is to make good on your agreement. The production team switches into gear to process and deliver the order to your customer. Converting the quote into an order and integrating it with manufacturing software to draw up a bill of materials are key steps.

Billing and Invoicing

After delivering the order, billing and invoicing keep your cash flow in the green. Draw up an accurate invoice to account for taxes, services, additional fees, and discounts using details from the quote.

Revenue Recognition

You’re in the penultimate step once you get that bank notification for a credit entry. Officially reporting revenue helps determine profit and loss. It’s also essential to comply with ACS 606 regulations and ensure accuracy to improve reporting and analysis.

Renewals and Modifications

A repeat customer is always the goal. You want to keep the customer using insights from reporting analysis to make modifications and maximize sales. Monitoring renewal due dates and tracking subscriptions and expired contracts identifies opportunities and streamlines the renewal process.

Get our CPQ Software Requirements Template

Primary Benefits

Implementing a new quote-to-cash process can feel like a Sisyphean task. But a new and improved sales cycle’s benefits make it all worthwhile. Here are some perks an efficient quote-to-cash process brings.

Optimize Sales Cycles

Waiting for price and discount approvals, retyping quote information or using outdated data is no fun for sales reps. Clear workflows, information flows and centralized information increase efficiency and optimization.

Minimize Errors

Mistakes happen. However, redoing configurations, quotes and invoices because of defunct pricing rules and miscommunications can be easily avoided with updated procedures, real-time data and traceable collaboration.

Increase Personalization

Complex configurations are like trick plays. They take extra time and additional communication. Integrating processes with different teams streamline communication with clients and team members to speed up response times for heavily modified products.

Boost Revenue

Identifying cross-sell and upsell opportunities is the golden ticket in sales. Integration and data insights from reporting help pinpoint selling opportunities and modifications you can make to boost renewals.

Best Practices

Like snowflakes or extremely complex configurations, each sales process is unique. Finding a quote-to-cash process that works for you can take a bit of trial and error. However, we’ve researched a few cheat codes to help make quote-to-cash implementation that much easier.

Use Automation

Increasing efficiency with automation just makes sense. Automating manual steps like data entry, email follow-ups and pricing approvals minimizes the time sales reps spend on administrative tasks. Auto-updating information from CRM and ERP software keeps different departments on the same page and reduces context-switching.

Invest in Software

Quoting software is a game changer. Like investing in Apple in the 80s, new software could turn out to be the mother lode. Solutions can help boost win rates, optimize sales cycles, improve accuracy and build brand recognition. Typical features include quote templates, automated renewals, status tracking, quote conversion, integrations and collaboration tools.

Before you spring for a new quote-to-cash solution, ask the vendor about AI levels, deployment options and domain expertise. It doesn’t need to cost you either. Check our guide to the best free quoting software for some affordable options.

Streamline Communication

Receiving price approvals, configuration details and quote modifications doesn’t need to feel like a high-stakes tennis rally. Use collaboration tools and define workflows to streamline tasks. Provide contextual knowledge on projects with comments and links for quicker responses and better feedback.

Improve Reporting

Fixing things becomes nearly impossible if you don’t know what’s broken. Consistent, concise reporting using accurate data makes it easy to analyze areas you can improve, like low quote win rates, slow response times and breakdowns in processes. Monitoring churn rates, high-performing quotes, popular products and effective upsell opportunities provides a roadmap for improvement.

Compare Top CPQ Software Leaders

Next Steps

Like a nagging injury, inefficiencies in your quote-to-cash process can slow down operations and lead to larger issues. Fortunately, the magic potion exists in the form of software. But it isn’t all smooth sailing. Finding the right quote-to-cash software is a complex endeavor. Use our free requirements template to identify and grade products against your needs.

How can a quote-to-cash solution help your business? Let us know in the comments below.