What is Quote to Cash?
Quote-to-cash (also known as lead-to-cash, order-to-revenue, or lead-to-revenue-recognition ) is essentially the journey that customers go through—from lead to opportunity, to a signed contract through to payment, and even further to recognized revenue and renewal—during the entire customer lifecycle. The quote to cash process, also known as the QTC process, encapsulates your entire business and crosses multiple departments (such as sales, customer service, finance, and fulfillment/delivery), IT systems, and even corporate leadership.
Because of this, a strong quote-to-cash process that drives your business forward doesn’t just form on its own—it’s something that must be intentionally designed and created by your company. Otherwise, if the process isn’t designed and managed well, your company’s siloed departments, systems and processes can create friction and incompatibility points that will frustrate your customers and seriously impede your company’s growth. If the process is designed well then you will benefit from more recognized revenue and cash.
Every department in your company also needs to consider how they are set up for scale. What would your business look like if some of your strategic initiatives suddenly took off and you had a huge spike in growth all at once—would your company be able to scale to handle it? Or would your existing systems and processes potentially buckle under that pressure and hinder or block that growth?
Why companies need a strong quote-to-cash process
Having a strong quote-to-cash process is an incredible competitive advantage that enables you to out-execute your peers. A strong quote to cash process improves your product or service, marketing, sales, customer service and financial operations which directly results in higher close rates, improved customer experiences and better cash positions that can make a competitive difference.
Some of the benefits of having a strong quote-to-cash include:
- Improve sales conversion rates. Optimizing and speeding the sales process often results in higher sales conversion rates. “Time kills all deals” can be minimized when you can get clear and accurate quotes out to customers quickly.
- Faster payments. Speeding up the order-to-payment process enables your company to receive payment earlier, increasing collections and improving cash positions, which can give you more of a financial advantage.
- A 360-degree view of the customer to make better and more informed decisions. Having your rational and connected data and applications gives your company a complete 360-degree view of the customer. This enables you to gain insight, such as which customers are your best customers and which customers are in danger of churning. With the right data, your team can also make more informed choices, like possibly canceling big discounts to a customer who has a large A/R balance.
- Efficiency and scale. Automating the process helps maximize efficiency and scale. The more automated the process, the easier it is to go from 100 quotes to 1,000 quotes to 10,000 quotes per time period. Such scalability isn’t possible, for example, if your approval cycles are done manually through email. Does senior management need to approve minor discounts? Setting up thresholds, where higher-risk quotes require different levels of approval, minimizes back-and-forth inefficient email communication. And with features like quote configurators, the automation actually makes your quotes more accurate and standardized.
- Cost efficiency that goes straight to the bottom line. Improvements like integration between CRM and ERP result in a process where team members can simply view the data they need in the primary application they are using without having to log into a separate system. In addition, end-users receive the information they want on demand and without having to learn and juggle multiple systems. This can be powerful to have, for example, when an account manager can instantly see a customer’s order history, payment history and balances before going into a meeting. Knowing inventory and expected ship dates can set accurate customer expectations and increase CSAT. Having readily accessible data can also enable future improvements like automatic workflows that are triggered, for instance, when a customer’s late payments reach a certain threshold, allowing your team to focus on higher-value activities.
- Increase opportunities to grow your company’s revenue and prevent revenue leakage. A strong quote-to-cash process is all about identifying, operationalizing and scaling opportunities to grow revenue. It also reduces revenue leakage by minimizing issues like incorrectly applied discounts or lost opportunities for co-termination, bundling, renewal and upgrade options.
Once you have a scalable quote-to-cash architecture in place, not only will it pay off in easier administration, but it will also provide your company with a flexible, best practices infrastructure that can respond better to planned and unplanned changes in the future. RSM has expertise across the entire quote-to-cash process with expertise in marketing, sales, service, logistics, billing, revenue recognition and compliance with deep product expertise in Salesforce and, ERP (particularly NetSuite, Intacct, and Microsoft).
About RSM’s Salesforce consulting practice
RSM offers a full range of professional Salesforce consulting and development-related services to meet your needs both now and in the future. Because every Salesforce project is unique, we approach each engagement as a partnership and offer the trust, transparency and operational excellence that goes with it. We leverage our extensive experience across a variety of industries to create innovative, scalable and sustainable solutions for you on time and within budget. In other words, your success is our success—we want you to succeed and grow with Salesforce.
For more information on value creation through optimized quote to cash, read this article.