• Quote to Cash

  • Quote-to-Cash Process

  • Quote to Cash Tool

  • QTC Tool


What Is Quote-to-Cash?

The quote-to-cash process involves the entire sales process, from product configuration and pricing to quotation, acceptance, ordering, and revenue management.

Imagine all the steps involved in creating a custom quote. You can discuss with the client what it is they would like quoted, make sure the specifications are correct, and develop a quote for their approval.

Quote-to-cash is just the beginning. The final piece of this puzzle is to negotiate the quote, invoice the client, and receive payment for the order. In some cases, repeat customers come back to purchase additional products previously configured and reorders and renegotiations can occur.

It is crucial that you are using the best Quote-to-cash software solution for your company's work regardless of the software you use. It's also an aspect of your business that needs to be streamlined and modernized in order for it to run more efficiently.

How does the Quote-to-Cash process work? 

Quote-to-cash involves six basic steps. The following are:

  • Configuration: Customers configure their quotes by selecting what they want and specifying the specifications that they need.
  • Price/Quote - This is where the sales department determines exactly what will go into the product, how much it will cost to make, and how much profit the manufacturer expects to make on the quote. After setting the unit price, the sales department presents the client with a detailed quote for the order.
  • Contract: A contract or proposal is created once the customer receives the quote and accepts it. They can then begin working on the products once they sign.
  • Billing — Once the quote is completed, the accounting team will send out an itemized bill and collect the money owed.
  • Analysis - The sales staff can analyze the orders placed and then look for possible ways to increase sales. You can improve the process at this point.
  • Renew - The customer can also renew their order at a later date to purchase more of the previously configured item. Alternatives include the manufacturer suggesting a renewal or cross-selling.

The quote-to-cash process consists of these six steps. It's clear that your company needs to streamline and integrate its processes to run smoothly. Many businesses neglect the last step, analysis. Your business will not grow if you fail to analyze your successes and inefficiencies.

The Quote-to-Cash Process

Managing the quote-to-cash process can be quite challenging at times. The process is complicated because there are so many moving parts. Simplify it using a quote to cash tool.

The pieces of this puzzle must work together, just as they must in a machine. It could cost you the whole process if one of the machines breaks down.

If the configuration process does not go smoothly, if a quote is delayed, or if the follow-up analysis is not completed, then you could be losing sales and the production line could be wasting money because it is not working at maximum capacity.

It's for this reason that you should consider automating your process using a QTC tool. In this way, you streamline the steps and don't have to worry about losing time or money.

Streamlining the quote-to-cash process

Then, how exactly do you automate the quote-to-cash process? In addition to CRMs, CPQs, and ERP solutions exist that can assist you with this.

CRM (Customer Relationship Management )

CRM systems keep track of your relationships with customers. Maintaining the most up-to-date contact information and past sales information is made easier with this tool. The tool also makes it easier to market, sell, and provide customer service to these clients.

CRM software helps you with the quote-to-cash process by providing all the information you need when signing contracts, billing, collecting, and analyzing post-sales.

Pricing Configuration (CPQ)

A custom-designed product is created with your CPQ solution. In CPQ software, a salesperson enters the specifications of the product into the software, or (if you have an online store) the customer can input the information themselves.

The QTC software then determines whether the product can be manufactured according to those specifications and generates a Bill of Materials (BOM). At this point, the CPQ software determines how much the product will cost to manufacture and can be programmed with pre-set profit margins to determine the price of the product.

Next, a quote is created and sent to the client for approval. The production of the project can proceed upon getting approval from the client. The client will sign a professional contract once it has been approved.

The process is much more efficient than it was in the past, eliminating a lot of back-and-forth between sales, engineering, and production. These departments will be able to do their jobs more efficiently as a result.

ERP (Enterprise Resource Planning)

By using an ERP system, you can maintain your item inventory in real-time, giving your various departments the best data for making decisions. You can keep constant track of your internal inventory in the quote-to-cash platform.

If a customer orders a configured product, the CPQ system creates a bill of material, and your ERP tracks how many need to be manufactured and how many need to be ordered from an outside vendor. In this way, the entire process can run smoothly with minimal interruption.

What are the three layers of quote to cash

Quote-to-cash consists of three distinct layers. CPQ is one of them, as well as Contract Management and Revenue Management.

  1. As it moves into production, CPQ handles configuration, quoting, and ordering.
  2. Using the Contract Management layer, you can quickly create contracts for a configured order, including legal documents such as NDAs (Non-Disclosure Agreements).
  3. Billing and contract renegotiations are part of the Revenue Management layer.

CPQ and Quote-to-Cash: Where VARStreet Fits

CPQ software from VARStreet does much more than speed up your quote-to-cash process. It offers captivating visualization tools, integrates with CAD software for engineering drawings, and can even generate production routings on your shop floor.

VARStreet's CPQ integrates seamlessly with your CRM and ERP systems so that each works to its maximum potential.

Author's Bio: 

Arnaldo is an American writer for various digital news publications. After being in the eCommerce industry for more than 15 years, Arnaldo has a good understanding of what it takes to make an eCommerce business successful. He also likes to cover newsworthy events related to business management software, customer relationship management (CRM), and Quoting software