If you manage a business that sells custom products or services, you’re likely already using the quote-to-cash (QTC) process without realizing it, but you may still be wondering, “What is quote to cash?” Not familiarizing yourself with the QTC process can decrease sales and profits. Therefore, your company should learn the ins and outs of QTC and streamline the process so you can grow your business.
This article will discuss the entire process and how to modernize your business using the QTC process.
The Quote-to-Cash Process
QTC, simply put, is the entire sales process from start to finish. All the steps you go through, beginning with learning what your customer wants to be quoted and ending with completing the order, are the QTC process.
The best thing any business owner can do is streamline and modernize this process. As a result, you’ll work toward maximizing profits and growing your business as a whole. But first, let’s take a look at the entire QTC process.
Configuration is the first step of QTC. This step involves determining what product your client wants to have quoted. Next, you’ll discuss, in detail, all of the specifications so you can make it happen.
In this step, your company’s sales department will determine what materials and labor will be needed to make your customer’s product, how much it will cost to make, and how much profit the manufacturer needs to make. Your sales department will then set the price for each unit and give your customer a detailed quote regarding their order.
During the next part of the process, your customer will need to accept or decline your quoted offer. Should they accept, the contract is the formal agreement between you and the customer that sets the price in stone. Once your client has accepted the contract, the manufacturer can get to work building their product.
After discussing and accepting the contract, your accounting department will create an itemized bill for the number of units produced, send it to the customer, and collect the payment.
Sales analysis is one of the essential steps in the QTC process but is often overlooked by many companies. Sales analysis involves your sales department analyzing the orders to improve the process and marketing this new product to other potential clients.
The renewal step of QTC is where your customer can renew their agreement with you for more of the same product in the future. Renewal also involves cross-selling the new product to other potential clients.
These are the steps involved in the QTC process. Traditionally, this process is completed by the various members of your organization, which opens your company up to human error. Streamlining and modernizing the QTC process with appropriate software will make QTC easier and more efficient.
One of the most popular ways to automate the QTC process is by using configure price quote (CPQ) software. When you use CPQ software, your customer usually gets in contact with a sales team member who enters their product specifications into the system. Next, the software determines if the product can be made. If so, the CPQ software will create a bill of materials and determine how much it will cost to make. Next, you can typically enter your desired profit margins and the CPQ software will determine how much you should charge for the product. Finally, your CPQ software will create the quote and send it to your client. Once the quote is approved, the CPQ can then generate a contract for your customer, and the manufacturer can get to work.
Automate and Improve QTC
By using CPQ software to automate the QTC process, you remove much of the time-consuming back-and-forth communications between your sales, manufacturing, and accounting teams. As a result, you’ll save time and increase profits.