Emilia Dunaj
Emilia Dunaj
Head of Technology Insights
May 2024, 8 min. read

When a customer walks in the door or clicks your website, they’re genuinely interested in what you offer. But somewhere between that initial spark and final payment (the quote-to-cash or QTC process), things get bogged down. Delays, errors, frustration … Suddenly, that sale, and maybe even your market lead, goes away. 

What is the solution? Optimizing your quote-to-cash process. 

In the following sections, we’ll break down this process and share key steps and strategic insights to streamline your approach. Get ready for smoother operations and improved outcomes in every transaction.

What is the Q2C meaning?

Quote-to-cash, often abbreviated as QTC or Q2C, covers a set of business processes that span the entire sales cycle. It represents a critical sequence of steps that companies follow to close deals. It begins with a customer’s intent to buy (providing a quote) and ends with collecting the payment (the cash). 

QTC picks up after the early stages of the buyer’s journey–your marketing activities, prospect outreach, and follow-up calls have been completed. Managing it well can hugely increase the revenue generated from each sale, showing just how crucial it is for financial success.

What is the quote-to-cash (QTC) process?

The customer’s journey is divided into several key stages. Each phase is crucial for ensuring a smooth transition and successful closure. Depending on the industry and business model, the QTC process can vary. However, it typically involves a consistent sequence of these phases.

hwo the quoe to cash process looks like

Configure, Price, Quote (CPQ)

This is the initial and perhaps most critical phase, where the specific needs of customers are configured, prices are set accordingly, and quotes are generated. Effective CPQ processes enable:

  • Configuration: Customers can customize their orders based on a variety of parameters, ensuring that the product or service meets their specific requirements.
  • Pricing: Calculating the price based on the configuration. 
  • Quoting: Applying any additional factors such as discounts, promotional offers, or region-specific pricing. A formal quote is created, approved, and sent to the customer, detailing the costs, specifications, and terms of the offer. 

Contract management

After the quote is accepted by the customer, the contract management phase begins. This stage includes:

  • Contract: Drafting a contract that includes all terms of the sale, such as payment terms, delivery schedules, and service levels.
  • Negotiation: Engaging with the customer to finalize the terms of the contract, ensuring both parties are in agreement.
  • Approval: The contract must be reviewed and approved by all relevant parties, often requiring several rounds of revisions.
  • Execution: Signing of the contract by both the customer and the provider to formalize the agreement.

Revenue management

The final phase focuses on managing the financial aspects of the transaction, which includes:

  • Billing: Generating invoices based on the agreed terms in the contract.
  • Revenue recognition: Recognizing revenue in the financial records according to accounting standards, which may not coincide directly with the billing cycle.
  • Renewal: In many business models, a big portion of revenue comes from repeat customers and renewed contracts, which may need adjusting the terms as necessary.

These stages are interconnected. Now, let’s discuss why it’s so important to optimize the QTC process.  

Why is it important to optimize QTC? 

Delays and errors at any stage, especially during the Configure, Price, Quote (CPQ) phase, can lead to lost sales. A well-optimized Q2C ensures timely, accurate quotes, keeping you competitive.

B2B customers expect a quick, accurate, and hassle-free customer experience. A smooth Q2C process minimizes errors and delays, leading to happier customers who are more likely to return and recommend you. That’s exactly what self-service product configurator platforms bring. 

These modern tools allow customers to customize their products independently, enhancing their experience by providing immediate responses and more control over their purchases. Recent studies revealed that 100% of B2B buyers want these kinds of self-serve options for at least part of the purchasing process. 

Efficiency helps you quickly recover the costs of getting and serving customers. For example, if you can quickly move from setting up a complex product to giving out a precise, customized quote, you’re more likely to win clients. This faster process boosts your cash flow and reduces financial pressure.

Every Q2C step utilizes resources. Optimizing these steps reduces the time and manpower needed, lowering operational costs. Workflow automation plays a key role. It frees your staff from repetitive tasks and allows them to focus on more strategic activities.

8 Key steps to optimize your Q2C process

An optimized quote-to-cash process is smooth, fast, and error-free. It leads to happy customers receiving exactly what they need and your team empowered to close deals quicker. 

how improve quote to cash process with cpq system

This is possible when you optimize your Q2C process. Here’s your roadmap to achieving that:

1. Set up product customization

Ditch the one-size-fits-all approach! Implement a configurable product catalog or CPQ system, letting customers design products that perfectly match their needs. This streamlines selection, ensures perfect product fit, and transforms your sales team into personalization wizards. Moreover, with self-service options, customers take charge. This leads to boosted satisfaction and an accelerated buying process.

2. Use rule-based pricing tools

Eliminate manual calculations and inconsistencies with the dynamic pricing feature of CPQ. It uses rule-based pricing to automatically calculate prices and discounts. This ensures consistent pricing aligns with company policies. Additionally, it frees up your sales team to focus on building customer relationships, not crunching numbers.

3. Speed up quote creation

With automated quoting, you can forget about bogged-down sales processes and frustrated customers waiting for quotes. Moreover, automate quote generation with a user-friendly CPQ solution that seamlessly integrates with your CRM and ERP systems. This ensures accurate and fast quotes, keeping data consistent across your entire operation.

Moreover, centralized quoting through CPQ ensures uniformity, eliminating discrepancies that confuse customers. Plus, this system lets you track revisions and approvals for control and compliance.

4. Streamline approval workflows

Break free from manual approval bottlenecks. Automate approval workflows within your Q2C process to ensure quotes and orders move swiftly through the pipeline. A CPQ system automates approval rules, speeding up information flow and shortening the sales cycle. When building the software, set clear conditions for automatic approvals and ensure seamless integration with your existing sales and CRM platforms for a unified workflow.

5. Simplify contract creation

Use templates and automation tools for quick and error-free contract creation. This helps ensure that all terms are correct and legally sound, providing security for both you and your customers.

6. Improve order fulfillment 

Make sure your teams—from sales to delivery—are well-coordinated. Linked digital systems can track orders and ensure they are filled correctly and delivered on time. This way, you’re meeting customer expectations every step of the way.

📢 Read also: 5 Essential Supply Chain Management Automation Tools

7. Automate billing and invoicing

Automate your billing to send out invoices quickly and accurately. This helps ensure payments are received on time and reduces order and invoicing errors, keeping your cash flow steady and your financial records clear.

8. Ensure timely renewals

Manage renewals proactively to maintain customer relationships and revenue continuity. Additionally, automated tools track contract end dates, enable timely renewals and ensure contract terms are up-to-date, minimizing the risk of losing existing customers.

The benefits of quote-to-cash process managed in a CPQ system

The goal of introducing modern digital tools is to optimize your business processes. CPQ simplifies the configuring, pricing, and quoting process, which means your sales teams can handle more quotes and manage more customer interactions efficiently. 

So, if your sales reps usually take hours to produce a quote or a proposal, this can be reduced to minutes. With CPQ, they can respond more quickly to customer inquiries, significantly increasing the likelihood of winning business.

Here are the key CPQ benefits summarized:

  • Quicker quoting process
  • Improved sales performance
  • Better accuracy and consistency
  • Automated approval processes
  • Easier margin and profitability management

With Forrester predicting that by 2027, nearly a quarter of all US B2B sales will be online, it’s essential to look into offering self-service functionalities today. Embedding CPQ into your B2B eCommerce platform allows customers to create accurate product configurations independently and pay for them without leaving your platform. 

📢 Further reading: Embedded CPQ Implementation in Ecommerce

How to start with QTC process transformation?

Optimizing your quote-to-cash process means faster sales cycles, improved customer satisfaction, and better financial health. Though it may seem like a big investment, the benefits of streamlined operations and increased revenue are undeniable.

With CPQ software, you automate the most important aspects of the QTC process: configuring, pricing, and quoting. If you sell configure-to-order products or have a huge product portfolio, finding an experienced partner to build your software is the right investment. 

At Right Information, we specialize in designing and developing custom product configurators and CPQ software solutions tailored to your unique needs.

Furthermore, are you ready to move from your manual quoting system to a modern, automated solution that will impress your sales team and customers?

Our mission is to ensure a smooth and effective transformation.