Quote-to-cash is almost exactly what it sounds like: the process of formalizing customer interest (via a sales quote) and transforming it into recognized revenue for your business.
The process for quote-to-cash is not “send quote, get cash” — there are many more moving parts you need to consider.
Here are the basic steps in quote-to-cash that you can expect in most every sale.
1. Turn a prospect into a lead, and a lead into an opportunity
Depending on your industry and your sales lifecycle, step 1 can take days, months, or even years. It could require as little as a single email, or it could take dozens of in-person meetings and demos and maybe even a little wining and dining.
A customer relationship management solution in your quote-to-cash process (such as Dynamics, Zoho, or Salesforce) with a marketing automation extension (such as Marketo, HubSpot, or Pardot) is often critical to nurture your “looky loos” into hot opportunities.
2. Create the quote, with optimized product and pricing configurations
Here’s where software can make a HUGE difference. For some people, “quote-to-cash” means nothing more than “configure, price, quote” (a.k.a., CPQ or sales proposal automation).
3. Get that quote signed (which can have anywhere from 1 to 1m steps)
CPQ figures big in step two (as it empowers you with the ability to quickly create professional-looking quotes with optimal pricing), and it’s back for step 3.
Because in addition to automating most of the building and sending of your sales quotes, many CPQ solutions also automate the reply process by sending reps reminders, etc.
They even offer quote tracking tools that enable a manager to easily see which proposals may need a nudge in this stage (which is easily the most critical in the quote-to-cash process).
4. Make the quote into a contract, and get that contract signed
In some cases, a signed sales quote is as good as a signed contract. In others, a greater level of supporting materials (e.g., NDAs, liability agreements, etc.) need to be added, along with, for example, sign-offs from more stakeholders. There are additional steps herein, of course: negotiating, execution, etc.
The thing to keep in mind about this step in the process is that it will go far more smoothly if you and your customer came to a complete agreement on products and pricing in steps 1 - 3. Because if you agree on pricing, you’ve cleared the highest hurdle and it should all be downhill from here (pardon the mixed metaphor).
5. Fulfill and invoice the order
In most cases, you won’t see cash from your quote until you fulfill your end of the contract — providing your product and/or service. Even then, you won’t see cash from your quote until you send an invoice and your customer processes it.
As with products and pricing, do all you can to nail these down within the sales proposal. Typically, fulfillment and invoicing will be a scalable, replicable process for a business, so those elements in any quote can and should be “templated.” And if it can be templated, it can be added to a proposal template, so ensure your quote templates have this language and these terms baked in and agreed to early on.
6. Look for renewal opportunities (a.k.a. “quote-to-ongoing-cash”)
Once a customer, always a customer? Not necessarily. But if you approach quote-to-cash as an open-ended process rather than a one-time thing, you can lay the foundation in every communication and every quote to build interest in the next quote, too.
After step 5, when your quote has essentially become cash, check in on your customer and ensure that they have not only received or deployed your product, service, or solution, but are actively using it, too.
Checking in on their progress is good for everyone:
It lets your customers know that you truly care about their success
It lets you and your colleagues know about any challenges your current customers may be facing that should be addressed before sending proposals to future customers
It sets the stage for the next time you’re ready to turn a quote into cash
