Discrete manufacturers often find challenges in streamlining the sales cycles, eliminating risks from their financial agreements, increasing deal sizes and improving the collaboration between finance, sales, regulations, and operations. Optimizing these business-critical process will provide these entities with a leg up when it comes to generating, managing, and collecting revenue.
What is Quote-to-Cash?
Quote-to-cash refers to an end to end process which covers business lifecycle, right from the product or service configuration to quoting, contract negotiation & execution and all the way through to invoicing, revenue recognition and renewals. The main idea behind the whole process is the creation of a seamless and smooth transition from sales quote to approved order, successful order to order fulfillment, and invoicing to payment through which achieving a reduction in manual bottlenecks and errors.
From Quote to Cash:
- Pricing: Pricing is the best possible way to influence the behavior of your customers, partners, and reps. In the world of quote-to-cash, pricing is referred to as the set of rules that dictate what incentives can be offered to the business’s customers without cutting into margins and how sales can price a deal. It should give reps an ability to accomplish the deals without impacting profitability and induce a simultaneous flexibility and consistency, to not only change with the market conditions but also maximize the output of the channel.
- Quoting (Estimate): To be responsive and responsible towards the customers, your Sales team need to create estimates as quickly as possible. With the help of automation in quoting processes, sales reps have access to quote templates with product names, prices, discounts, terms & conditions at the click of a button. This allow them to generate accurate quotes with just a few simple clicks, send it in an e-mail, and even include an e-signature to close the deal
- Order: Unlike the traditional practices where the manufacturers entered their orders into the QuickBooks manually, and any change in the order would be a very back breaking affair, with Quote-to-cash solution changes can be made to a placed order before the order is fulfilled, offering flexibility on the production floor. If the customer introduces a particular change to the order, the solution creates a flow of that automatically reflects the changes in all other departments that are dependent on the order. After a contract between the manufacturer and the customer has been created, negotiated and executed, operations kick into high gear to ensure timely delivery to the customer. In this critical part of the deal, Quote-to-cash solutions provide visibility to stay abreast of the changing delivery conditions and the orders.
- Billing: Since billing is an integral part of revenue recognition and cash forecasting, incorrect invoices can lead to inconsistency in billing timeframes and sending wrong signals to the customers about the sense of responsibility. A smooth and streamlined Quote-to-Cash solution makes billing easy since it allows for automatic transferring of quote details into a contract and from there to the finance team, in getting the billing info and renewal information automatically.
- Revenue Recognition: When everything between Quote-to-cash has gone down well, it would obviously induce the closing of the deal. However, the closing of a deal and revenue recognition are two completely different concepts. Recognizing the revenue incorrectly can introduce a lot of risks since it is a part of business valuation, it can even cause the stock to plunge. With important details like payment terms, delivery schedules, and pricing is made available to the staff creating invoices, the business is more likely to recognize its revenue correctly.
- Renewal: An enormous amount of recurring revenue flows into the businesses through repeat or subscription customers. The Quote-to-cash solutions help organizations in shortening renew cycles and increasing deal sizes.
Hence, we can safely say that even though Quote to Cash processes have their fair share of complexity, if the diversity of different businesses and suggestions from different departments are taken into consideration, redesigning of strategic and financial policies can be done easily. This will in-turn increase the productivity and sales of any organization.