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Ultimate Guide to Quote to Cash: A small business guide

The sales team plays a crucial role in a company’s revenue and profitability. The success of a sales team is based on structured, streamlined procedures. Often, sales representatives are given murky, ill-defined workflows or procedures that are so burdensome that they spend more time on administrative tasks than on actual selling. One of the most vulnerable areas of the sales process is the Quote to Cash (QTC) process.

What does Quote to Cash (QTC) mean?

Quote to cash describes the end-to-end process from a sales representative delivering a quote to the customer purchasing a product or service. It’s essential to a successful sales strategy.

A sales representative must complete several steps before they reach the QTC stage, such as cold calling and following up with leads. When a customer submits a request for proposal (RFP), the QTC process officially begins.

Participating in QTC are a number of teams. Sales managers sign off on any custom quotes. Accountants collect the payments. Order fulfillment may be handled by account management.

Here are the 7 steps of the quote-to-cash process (QTC)

The QTC process consists of discrete steps. CPQ (configure, price, quote) is actually a sequence of steps for providing a quote.

The QTC process is broken down into steps.

1. Set up the quote

When sales reps reach the RFP stage, they are on the verge of closing the deal. Your prospective buyers will always ask for a price quote when they consider your products.

QTC begins with this request for proposals. Constructing a proposal includes identifying the products and services the customer needs.

Sales reps pitch this configuration to clients in advance. In addition to generating the prospect’s interest in your company’s offerings, the sales pitch served a second purpose.

A representative probed the customer’s business needs during that meeting. If you have this information, you can put together a compelling quote order focusing on the company’s products and services most relevant to the customer’s situation.

Based on the most popular or basic offerings, some organizations create standard quotes.

2. Prices

In the proposal, you should configure the relevant products and services, and then price them.

To ensure efficiency, accuracy, and profitability, pricing is generally standardized or automated through software. To avoid conflicts of interest, a team outside of sales should provide pricing if that’s not possible.

Depending on your business model, pricing can be quite complex. 

Creating a price quote can be a difficult, lengthy process due to this complexity. This is why you should avoid requiring sales reps to go through a manual pricing process.

Manually processing data is asking for trouble. The rep’s time is not only wasted, but it can also result in errors or a price that is too low to be profitable, especially when you consider the sales rep’s commission.

Implement an easy-to-understand pricing structure. The sales rep can quickly add price quotes to the proposal and explain them to the customer in this way.

Use software to streamline the pricing process when a simple pricing structure isn’t possible.

3. Write the quote

Once you’ve worked out your product configuration and pricing, it’s time to put together a cohesive, clear business proposal. According to the proposal, the customer is buying products and services for what price.

A proposal always includes legal documentation outlining the terms of the agreement with the client. This documentation is drafted by your legal team in advance, and it functions as a contract between your company and the client.

This information should be inserted into a standard template by sales teams. Templates reduce errors, guarantee a professional look, and streamline the CPQ process. To speed up the closing process, the proposal template should be short and simple.

Use electronic signature software to simplify proposal creation and contract signing. It makes it easy and convenient to manage many proposals with e-signature software that tracks which parties have signed the contract.

As the official quote, the proposal and legal agreements go to the client. But that’s not all. The client may counteroffer.

4. Contract negotiations and contract execution

Customers may have concerns or wish to negotiate parts of the contract. Large purchases are more likely to involve negotiations.

A lot of contract changes can occur during this stage of the QTC process. The contract may undergo many iterations, so a method for tracking these changes should be established. With tracking, your legal team can review changes efficiently.

Following a successful negotiation, the contract is signed, and you are ready to fulfill the order.

5. Fulfillment of orders

A team other than sales is usually responsible for executing the terms of the contract. A transition process must take place from the sales representative to those fulfilling the order.

Account managers usually take over ongoing oversight of customer relationships, including order fulfillment, from sales reps. In larger organizations, order fulfillment may be handled by a separate team.

It is a critical time. In order to deliver on the contract’s terms, your company must ensure a smooth transition process that allows for fast and orderly order fulfillment.

Within a day, you want the handoff from sales to order fulfillment to take place. Automation is a great way to accomplish this. As soon as the contract is signed, an automated system can begin processing the order.

6. Revenue recognition and billing

Payment collection marks the end of the QTC cycle. Upon receiving an order from the customer, the accounts receivable team generates an invoice.

The contract specifies the terms for quote payment. This information affects revenue recognition for your company.

Handoffs to the accounting department must also occur smoothly and on time. For revenue recognition purposes, the accounting team must understand the payment processing requirements in addition to the billing requirements.

Invoices are paid, funds are allocated, and the QTC process is officially over.

7. Analysis of the QTC

Payment processing marks the end of the QTC process flow, but there is still one more step necessary for your organization to succeed.

Take the time to analyze every proposal, whether it resulted in a sale or not.

  • What is the end-to-end QTC workflow time?
  • Does the QTC process suffer from bottlenecks or take too long?
  • What caused some proposals to be rejected? Was the customer’s decision influenced by price or QTC delays?
  • When will I receive payment?

Improve your QTC process, as well as other operational areas, such as your revenue forecasts, using these insights.

QTC in a nutshell

In the QTC workflow alone, there are many steps in the sales process. When spending so much time and energy to generate revenue, it’s vital to look beyond the sale to renewing customers.

Compared to acquiring new customers, renewing existing customers involves much less effort, cost, and time. As with new orders, renewals go through the same QTC workflow, but are processed more quickly because the customer is already familiar with your company.

Enhance renewal chances by automating as much of the QTC workflow as possible. When the QTC process is efficient and effective, it improves customer experiences and maximizes its value to teams across your organization.

Also Read: How to Start a Selling Business of Amazon Liquidation Pallets

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