With countless processes that touch nearly every function within your organization, as well as the prospect/customer and your internal systems, the quote-to-cash process (QTC) is prone to human errors, delays, customer dissatisfaction and revenue leakage. Designed to accelerate cash flow, QTC is one of the most critical business processes your company handles. At a high level, QTC encompasses the entire revenue process – configuration, pricing, quoting, contracts, order management, invoicing, billing, payments, and revenue recognition. Traditionally, these processes have been disconnected and handled manually, leading to inefficiencies, errors and lost revenue. Advancements in today’s quote to cash solutions mean it doesn’t have to be that way!
Gain Competitive Advantage With Quote to Cash Solutions
On the surface all quote to cash solutions may appear to be similar, however they don’t all offer the same services or functionality. What should you consider when looking for a quote to cash solution? Simply put, end-to-end automation.
Throughout the QTC journey, accuracy and speed are crucial. Expediting your QTC process requires a cloud-based solution that enables automation of the entire process. The solution should provide robust features that can handle the QTC processes described above, as well as automate collections management, connect payment partners, and ensure regulatory compliance.
Quote to cash solutions must offer the capabilities needed to automatically handle your unique requirements across quote-to-order (Q2O), QTC, and order-to-cash (O2C). You may be thinking: what’s the difference between the three? Shouldn’t all quote to cash solutions be able to automate all of the processes within each of these? The short answer – not necessarily. Let’s begin by taking a look at Q2O, O2C, the differences between QTC and O2C, and why you need a QTC solution that can automate all of the processes.
The Quote-to-Order Process
At the start of a business relationship, Q2O processes must be efficient and flawless. The perception formed during this phase influences not only the initial sale, but the potential for repeat business.
Quote-to-order contains a variety of stages, and depending on the business may encompass different processes. For most companies the end-to-end process incorporates 4 to 6 steps. The difference is in whether the business includes the configure and price steps of configure, price, quote (CPQ) within their Q2O processes. For now, we’ll focus on the four step business process – quote, proposal/contract, negotiation, and order.
- Quote: This step requires the quick delivery of error-free quotations. Unfortunately, complicated pricing structures, bundles, promotions, discounts, and rating fluctuations can result in extensive administrative time, quotation errors and delays in providing the quote. The process to develop a quote becomes even more problematic if you’re using spreadsheets. With a system that automates the entire process, you’re able to deliver accurate quotations before the competition and close more deals.
- Proposal/contract: Before your order team can generate a proposal/quote, all product/services, pricing and costs need to be finalized. It’s essential for the configurations of all products and packages to be accurate, and that the terms and conditions are clearly defined for efficient contract management.
- Negotiation: Negotiating the contract involves your legal team, the customer and possibly the sales team. This step may include pricing and installation changes, as well as change requests for additions or removals. Once all of the terms are agreed to, the contract is signed and the prospect becomes a customer.
- Order: With the order in hand, what are your next steps? Are you bogged down with manual efforts that require the re-entry of the product configuration and pricing? Not only is this process time consuming, but could result in order errors and fulfillment delays.
While it appears that the majority of the hard work is done, the entire process isn’t over until payment is received and recognized. Picking up with the order step, let’s walk through the O2C business processes and why automation is needed for speed and accuracy.
The Order-to-Cash Process
Essentially, this series of business processes refers to the steps that span how your company receives, processes, manages, and fulfills customer orders, as well as the creation of invoices, payment collection, and reporting. The O2C processes are directly tied to the revenue you generate, and your overall growth potential. Let’s take a look at the five O2C steps, beginning with order management.
- Order management: As the start of the O2C cycle, automatic notifications to various departments and teams are needed to kick off this process. In addition, integration to your customer relationship management system (CRM) is recommended for seamless management of all customer-facing O2C steps.
- Order fulfillment/shipping: This step involves processing and fulfilling the order, and notifying your shipping department. If you run a software-as-a-service (SaaS) company, you won’t have products to ship, but access to the software will need to be provided. Once the order is shipped or access provided, your system should automatically trigger an action to the finance team, informing them that an invoice can be generated.
- Invoicing: The finance team calculates the final charges and produces an invoice. As this step is critical to your cash flow, the invoice should be error free and contain all of the content captured in the quote and contract, as well as other information such as payment terms, discounts or promotions and taxes.
- Collecting payment: Automation of this process is essential to ensure payments are collected effortlessly. With real-time journal entries that are integrated to your enterprise resource planning (ERP) and accounting systems, you’re able to efficiently specify how and when revenue is to be recognized.
- Reporting: Finally, you need to keep a record of the data that includes all of the O2C processes. Payment needs to be logged against the order, bringing the process to a close.
Similar to the Q2O steps, automation is needed to improve efficiency, reduce errors and ensure a steady stream of income.
While on the surface it appears O2C is a subset of the QTC business processes, there are differences that make them unique to the lifecycle.
The first and most obvious difference is that QTC encompasses more processes. For example, O2C doesn’t include the CPQ steps whereas QTC does. In addition, while O2C leverages data from the contract, it doesn’t include the entire contract management lifecycle. On the other hand, QTC includes all of the contract management processes. Finally, O2C business processes are focused on the efficient and timely delivery of products and services purchased. Essentially, QTC consists of all of the steps within the lifecycle, with O2C processes included towards the end.
Quote to Cash Solutions Accelerate Your Cash Flow
Typically, QTC processes are plagued with complexities and manual efforts that lead to errors, bottlenecks, and a reduction in cash flow. Quote to cash solutions that can automate the QTC processes allow you to streamline your operations and drive more revenue.
With BillingPlatform you can streamline even the most complicated QTC steps, enabling you to automate the entire monetization process, from product conception through to revenue recognition – on a single platform. Talk to a member of our team today to learn more!