If you’re like many of your counterparts, the quote-to-cash (Q2C) process isn’t working as well as it did in the past. In fact, you may be at a stage where the entire cycle – configure, price, quote, contract management, order fulfillment, billing/invoicing, revenue recognition, and renewal – results in intensive manual effort for your cross-functional teams. Not to mention may cause errors, miscommunication, and customer friction. This is why many companies begin the process of finding quote-to-cash best practices they need to implement.
A recent MGI Research report explored the reasons behind this phenomenon and determined that historical Q2C practices and technology have outlived their shelf life. Designed to fuel growth, outdated Q2C is having the opposite effect. The inability to keep up with today’s new business models and customer expectations is hindering a company’s ability to profitably grow. This is why it’s time to make a change and harness quote-to-cash in a different way.
Are Your Quote-to-Cash Practices Inefficient?
To get a clearer picture of Q2C issues you may be experiencing, let’s first identify and describe each of the Q2C steps.
- Configuration: With a goal to develop a quote quickly and accurately, the first Q2C step requires your sales reps to identify the right combination of products and services to meet the customer’s requirements.
- Pricing: Increasing win rates and maximizing deal sizes depend on your sales reps ability to quickly determine the right prices for your products and services, which may also involve taking into consideration other factors such as promotions, discounts, incentives, bundles, add-ons, features, etc. – and this needs to be done without cutting into profit margins.
- Quotation: As one of the first impressions the prospect has of your business, the quote needs to be error-free, on-brand, and promptly delivered.
- Contract management: From contract creation and negotiation to execution, the contract captures deal details such as order specifications, pricing, payment terms, delivery schedule, and clauses such as renewals, termination, etc. Given that this is a formal and legal document, it’s essential that it is reviewed and approved by appropriate personnel and signed off by legal – without delay.
- Order fulfillment: Once the contract is finalized, the baton is handed to your operations team to deliver the right product(s) or schedule the service – in accordance with contract terms.
- Billing/invoicing: Accurate and timely billing is critical to your cash flow. Accounts receivable creates an itemized bill and sends an invoice to the customer. Delays or errors at this step can result in overdue or non-payments.
- Revenue recognition: The payment is received and recorded, and revenue is recognized in adherence to accounting standards such as ASC 606 and IFRS 15. When recognized incorrectly, the company opens itself up to significant risk and even financial repercussions.
- Renewal: The final Q2C step is focused on increasing customer lifetime value by cross-selling or up-selling products and services to your customers. Renewal is also imperative for companies that have repeat business or provide products or services on a subscription basis.
Are Your Quote-to-Cash Processes Hitting The Mark?
Q2C involves numerous departments – sales, service, operations, finance – and countless moving components and departmental hand-offs, making it one of the most complicated processes your company handles. If you’re experiencing gaps in your Q2C processes, it’s easy to see why. The questions you need to ask yourself are how extensive and how severe are my Q2C issues? To help you gauge the efficiency and effectiveness of your Q2C practices, we’ve provided the most common symptoms of ineffective Q2C.
- Inability to develop competitive quotes on a timely basis.
- Inaccurate, error-ridden, or delayed invoices.
- Delayed or non-payments from customers.
- Incorrect revenue recognition.
- Missed cross-sell and upsell opportunities.
- Frustrated and dissatisfied customers.
- Poor brand image.
What do the majority of these challenges have in common? If you’re experiencing one or more of these issues, the reason can typically be attributed to Q2C practices that aren’t streamlined. Many times, this is a result of siloed systems that require your internal teams to access multiple databases and resolve conflicting information.
Disparate software solutions can negatively affect virtually all your Q2C steps. This includes slow departmental hand-offs, underdelivered or over-delivered products and services, delayed invoicing, invoice disputes due to billing errors, customer dissatisfaction, and interrupted cash flow.
Streamline Quote-to-Cash Best Practices with the Right Tools
Creating efficient and effective quote-to-cash best practices starts by integrating systems that are critical to your Q2C practices. This allows disparate software solutions to work in tandem and provides you with the automation needed to eliminate tedious and error-prone tasks. These software solutions include:
Customer Relationship Management (CRM)
Critical in managing a company’s relationships and interactions with customers and potential customers. When used in conjunction with Q2C, product configuration, pricing, and quote generation, your CRM becomes a seamless part of the sales process. Additionally, it provides the customer information needed for contract management and billing.
Enterprise Resource Planning (ERP)
Used to manage day-to-day business activities, including accounting, procurement, project management, risk management and compliance, and supply chain operations. Integration of this software is critical to ensure uninterrupted Q2C processes.
Essential to Q2C processes, CPQ software reduces or even eliminates time-intensive interactions between departments. Sales reps simply enter specifications into the system and quickly receive valid combinations of products and services, pricing, and a quotation.
A process that is time-consuming and error-prone, revenue recognition software is a fundamental component of your Q2C processes. The right software enables you to streamline revenue management to allocate, reconcile, monitor, and recognize revenue for any pricing model, billing approach, or promotional offer. All while staying compliant with ASC 606 and IFRS 15 and reducing errors.
Even if you implement the most precise quote-to-cash best practices and processes, siloed systems will undo the effort. To optimize and follow quote-to-cash best practices you need a single source of the truth.
Keep Cash Flow Flowing in 2022 and Beyond
Give your cash flow a boost by taking a close look at your quote-to-cash practices and supporting software. With a solution built for today’s business models and customer expectations, you’ll be able to identify more sales opportunities, minimize quotation errors, reduce order and invoicing errors, increase customer retention, and improve revenue and profitability.
The right CPQ solution has the power to increase the number of proposals generated by your reps, improve lead conversion rates and average deal size, increase sales quota percentages, and much more. Unlike most CPQ offerings, BillingPlatform unites CPQ and billing in a single solution with a single product catalog that allows quotes to seamlessly translate into billing. We provide seamless integration to software solutions that are an integral part of your quote-to-cash best practices – providing you with an end-to-end solution that delivers a single source of the truth. Find out more today by talking to one of our experts.