The quote-to-cash (QTC) process is linked to the overall sales cycle of a product. This cycle commences with product configuration, moves on to quote generation, and ends with the finalization of a deal. Other elements of the sales process which it intertwines itself with include: revenue recognition, contract creation, and renewals. This article will delve further into the Q2C meaning, providing all readers with the ultimate guide on how to navigate it.
Benefits of implementing the QTC process
The implementation of quote-to-cash enables more effective revenue recognition to take place, whilst also causing a reduction in error. QTC encourages more detailed financial records to be kept. This in turn means that more accurate forecasts can be created for future sales and inventory can be managed more efficiently. When the QTC process is streamlined, the sales performance of a company is more easily tracked and the collection of invoices is simplified.
Secondly, another benefit of QTC is the improvement of the customer experience. This is because the receival of a quote which extensively outlines their purchase generates an element of trust and clarity.
Lastly, QTC increases the ability of revenue operations to monitor and analyze. This is because some businesses implement QTC whilst integrating it with other operations such as sales and finance. This makes the sales cycle a “single journey”, accentuating inefficiencies and thus enabling them to be changed.
Quote-to-cash best practices
- Make sure to set contracts which have thoroughly developed terms and conditions.
- Make sure that your approvals process is efficient and has a developed structure. For example, stakeholders and customers should be immediately notified when their signatures are required.
- The adoption of PSA (professional services automation) allows for effective streamlining of the QTC process
- A common piece of advice with QTC is to prorate new services into contracts and invoices
- The quoting process should always be streamlined and up-to-date regarding terms of service and invoice schedules
Six steps to navigating the quote-to-cash process
1. Project management
Project management within itself may be split into three sections, commencing with work management. This centers the requirement to meet deadlines, track progress, and make adjustments in order to maintain engagement levels. Secondly is effective project execution. This ties in with work management. Execution centers gathering expenses and comprehending which elements of engagement are decreasing or increasing. Such analysis also creates an element of visibility, in turn providing feedback to sales teams and management. Lastly is consultant time and expense data. The generation of such data helps to strengthen revenue forecasting.
2. Financial management
Financial management begins with spending control and budget reporting, with this step tying in with the creation of an actual budget. Such budgeting is essentially a forecast of how much should be spent and also provides information which can be relayed to customers. Finally is the billing structure, which manages revenue attainment. The billing structure hones in on contract limits, billing rates, and currency.
3. Opportunity management
Opportunity management commences with sales pipelines. This centers the creation of assumptions regarding sales and business factors such as estimated success rates. The pipeline also involves proposals and approvals. The last factor of the pipeline is project scoping and estimation. This occurs based upon engagement, with lists of deliverables, project goals, and deals being created.
4. Resource management
Resource management looks into upcoming demand to better inform decisions. Once projects are planned resources are then assigned to follow customer needs. Other elements considered include: project timelines, availability of resources, budgets, and the management of customer expectations.
5. Contract management
Contract management simply involves the negotiations of contract terms and then the formation of a finalized contract.
6. Revenue management
Revenue management involves invoicing, revenue collection, and revenue recognition. Accurate invoices are of utmost importance for making revenue forecasting successful. Revenue recognition centers decisions regarding what revenue will be obtained from an engagement over a certain period. Finally, revenue collection consists of accounting teams and their responsibility to remain on top of all invoices owed by a business.
In modern day business, the experience of the customer is increasingly becoming a focal point. Trends within the QTC process offer no exception to this. Many companies are striving to achieve increased rates of customer engagement. This is accompanied by the aim of increasing customer retention rates and overall satisfaction.
Outside of customer experience is the desire to optimize the QTC process, and improve businesses experiences of it. The most significant means of achieving this is through the adoption of software and automation. The use of software tools, such as Configure Price Quote (CPQ) supplements the efficiency of a company. Meanwhile, automation reduces the amount of time and resources required for the process. In addition to this, automating QTC streamlines it. Ultimately, the main trend within QTC is simplification.
To conclude, the QTC process centers the sales cycle of a product or service. QTC is also linked to factors such as revenue recognition. This leads on to one of the key benefits of implementing QTC, which is improved revenue recognition. Such improvement arises from QTC’s encouragement of more detailed financial records. There are a number of best practices which can be adopted with QTC including: the adoption of PSA, thoroughly developed contracts, and increased efficiency of the approvals process. There are six steps to navigating QTC, and its current trends center customer experience, the adoption of software, and automation.