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The quote-to-cash process in 10 steps

3 min read
Conga Team
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Quote-to-cash is today’s most important business process, because it is the process ultimately responsible for driving revenue for your organization. From a high level perspective, the quote-to-cash process connects a customer’s intent to buy (the CRM) to a company’s realization of revenue (in the back-end ERP system), encompassing the entirety of your sales, contract, and customer relationship lifecycles. Historically, these processes have been disconnected and siloed, leading to manual and tremendously inefficient sales cycles – ultimately putting what is important (the deals) at risk. When you optimize these highly collaborative aspects of your business, you bring visibility throughout your organization, speed up sales cycles, and close a higher percentage of your deals. Before diving in, be sure to go straight to the source by downloading the Ultimate Guide to Revenue Management.

What is quote-to-cash? The 10-step guide

Here are the ten steps of quote-to-cash that take you from the opportunity stage through revenue recognition:

1. Configuration

An ideal Combination of products and services is created

In the modern business environment of increasing product and deal complexity, identifying the right combination of goods and services to recommend to the customer is essential to winning the deal. By automatically providing these recommendations to your sales reps, you can ensure that all your sales reps become configuration experts – and sell like the top 20%.

2. Pricing 

Discounts, promotions and bundles are applied

In the quote-to-cash world, pricing refers to the set of rules that dictate how sales can best price a deal, and what incentives can be offered to customers to win deals. Identifying the right price for your products is only half the battle. Identifying the correct set of discounts, promotions and incentives that win you the customer - without cutting into margins - is essential to driving revenue. By uncovering the pricing and promotion strategy that was successful in the past, reps can apply the winning strategy to future deals, increasing win rate and maximizing deal size.

 3. Quoting

A quote is generated, approved and sent to the customer

One of the most important cogs in your sales cycle, quotes are often the first impression you have on your customers. While presenting a quick and accurate quote can win you a deal, an error riddled and delayed quote can lose you a customer. To create the optimal customer experience, it is imperative that you present a quote quickly, while ensuring that it is error free – a difficult balance.

4. Contract creation

A contract or order form is created

All deals end with an agreement that includes a set of terms and conditions. These agreements carry a lot of risk, and can seriously impact your revenue streams. When it comes to protecting your business, the details matter. As contracts are created, it is important that the right people have visibility into built-in clauses (renewal and termination clause for example) to ensure security.

5. Contract negotiation

Contract terms and clauses are redlined and changed

If you have ever been involved in a contract negotiation, you know it is a living, and constantly changing document. Once you begin negotiations, it is critical to get detailed visibility into what is changing in your contracts as they go through multiple iterations. Automatically providing this information to legal can cut down on the needless tasks that waste the time of expensive legal professionals.

6. Contract execution

An approved contract is signed and the deal is finalized

A significant roadblock in many company’s sales cycles, effective contract execution can drive deal acceleration. Enabling an eSignature tool can drastically reduce the time spent finalizing contracts. In addition, an effective tool can give visibility into current roadblocks and parties that have yet to sign.

7. Order fulfillment

The order is received, processed and delivered

Once the contract has been signed, operations jumps into gear to ensure that the right products are delivered to the right customers - in a timely manner. Having an integrated, visible system that provides one connected view of the customer can ensure that the changes to the order and requirements are reflected in the final product. Having a full quote-to-cash solution will ensure that the agreed upon quotes, pricing and contracting terms are communicated to the necessary parties, and connected to your ERP system.

8. Billing

Final charges are calculated and an invoice is sent to the customer

Accurate billing is critical to a successful company, as it determines cash flow, forecasting, and revenue recognition. Billing is easy with a seamlessly integrated quote-to-cash process – everything captured in the quote (details such as discounts, billing timeframes, etc) and the contract is automatically passed on to the finance team, guaranteeing accurate billing and renewal information.

9. Revenue recognition

Cash is received

Recognizing revenue incorrectly carries a lot of risk. When important details in your contracting terms – like pricing, net payment terms and delivery schedules – are made available to finance, your company will be more likely to recognize revenue correctly.

10. Renewal

Manage customer retention and recurring revenue

Especially with the SaaS model, an enormous percentage of revenue comes in the form of repeat and subscription customers – so it is vital to stay on top of your contracts. With insights into your quotes and contracts, your business can effectively identify expiring contracts, upsell and cross-sell current customers, and reduce churn.

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