As the saying goes “Cash is King”, this has never been more important than at the time of writing this article as interest rates are at all time highs and organizations are looking to “do more with less.” A strong cash generation and recovery process can be a strategic and competitive advantage for emerging enterprises.
Over the past year. I have had the privilege of supporting a number of clients across several industries as they launch, re-think, and optimize their quote-to-cash (QTC) process to shorten time to quote, improve cash flow, manage margins, and increase overall profitability.
In this article I will give a definition of the quote-to-cash process, what value an organization can capture from optimizing or re-thinking it, and how you can get started learning more or planning for a revamp of their quote to cash process.
What is Quote-to-cash?
The QTC process encompasses the end-to-end cycle of activities that a company undertakes from the moment a customer request for a quote is received to the eventual collection of payment for the delivered goods or services. It encompasses the entire sales cycle, including quoting, order management, invoicing, and revenue collection.
The QTC process typically involves stages such as quoting, order management, invoicing, and revenue collection. It begins with creating and submitting a formal quote to the customer, followed by processing the order, managing inventory, coordinating with production or service teams, generating and sending an invoice, and tracking and collecting payments from the customer. This process can typically span between multiple departments including sales, finance, warehousing and customer success.
Value of Optimising or Rethinking your Quote-to-Cash Process
Optimising or rethinking your QTC process can create value for organisations in a number of ways, here are a few that I have found to be particularly beneficial:
- Accelerated Revenue Generation: Streamlining and automating the QTC process reduces the time it takes to convert a quote into cash, leading to faster revenue recognition and improved cash flow. This can be done by investing in training, process optimisation or technologies that allow your teams to generate quotes faster and ensuring inventory can be checked quickly via integration with your Inventory Management System for example.
- Increased Operational Efficiency: QTC Optimization eliminates manual and redundant tasks, reduces errors and rework, and improves collaboration between different departments, allowing your team to do more with less. An example of this is ensuring that your team has an automated approval and renewal process, this will ensure less time is spent searching and waiting on manual approvals on quotes and orders. Another example from my Saas clients includes ensuring the contract amendment and renewal process is automated to ensure there are less mistakes during upgrading contracts and supporting clients during renewals, this ensures you can maintain a lean team as the volume of clients scales up in some instances.
- Enhanced Financial Stability: A streamlined QTC process contributes to overall financial stability for an organisation. The ability to efficiently convert quotes into cash and manage cash flow ensures that the organisation can meet its financial obligations, maintain healthy working capital levels, and navigate through challenging economic conditions with greater resilience.
Learn more about the Quote-to-Cash Process
There are a few ways to optimize, or re-imagine your QTC process from training, process optimization and implementing technology. As usual, I have added additional resources to to support you on a more efficient quote to cash process and below I have included a few resources I have found to be helpful to better understand the quote to cash process.
If you want to learn more or want to get started with can optimizing your quote-to-cash processes join our CPQ workshop!