April 10, 2017

Building a Quote-to-Cash Process

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A 2012 study by Capgemini found that streamlining the quote to cash process was responsible for a 35 percent reduction in wrong or duplicate orders, and a 15 percent increase in sale volume for reps. The exact steps and their breakdowns will differ from company to company, but implementing processes and procedures to guide your team can have an immediate effect on revenue.

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Various experts who deal with the quote to cash process suggest building out a flowchart that details each step in your company’s pipeline to help your team visualize the steps required to move from one stage of the process to another.

Let’s take a closer look.

1. Price

Modern companies deal with far greater price complexities than ever before. Credit policies, bulk discounts, and early payment terms all affect the consumer, while the back office deals with changing profit margins due to global trade.

To stay relevant, companies must combine all of these factors and keep their prices competitive. Automated tools and pricing catalogs that build models and based on the market and your own pricing structures can help alleviate some of this burden.

While you’re building a pricing structure, you should also set down a few basic policies outlining:

  • The minimum time a customer should expect product delivery
  • Discounts for net-30 or net-60 payment
  • Process for complaints or returns
  • Incentive options that don’t compromise profit

Lay out sales and product delivery processes that can act as guidelines for sales and service reps to build their quotes, then publish these policies internally and where customers can access them. The right policies will keep everyone in the organization on the same page and give customer-facing agents a document to reference in the case of customer complaints.

2. Quote

Building a quote for the customer makes up the first of two negotiation stages during the quote to cash process. At this point, your salespeople and product experts use their combined knowledge of the marketplace and the customer’s needs to build a mutually beneficial agreement.

Communication at this stage is of utmost importance. Everyone in the process should be on board with the terms, from accounting to customer success and product delivery, whether it’s a shipping and receiving crew at a warehouse or a software development team. Many companies find their process breaks down here: sales teams over-promise and product delivery teams take a more liberal view of timelines.

Open communication with all stakeholders can streamline the quote and fulfillment stages. Keep your pricing and delivery policies close at hand to reference, should you encounter any uncertainties.

3. Contract

Contract negotiations hold a crucial position in the quote to cash process, as customer-facing representatives combine internal policies and procedures with customer needs to build a mutually beneficial (and scalable) relationship. Aberdeen research notes, “18 percent of an enterprise’s sales cycle is attributed to contract creation, negotiation, and approval.” The loss or slow-down of these processes can have an immediate and devastating effect on companies.

18 percent of an enterprise’s sales cycle is attributed to contract creation, negotiation, and approval.

Technology has vastly improved the contract stage of the process. Companies that hope to automate and reduce friction during this stage should look into finding and integrating the following software:

E-signature and contract management software in particular can ease the contract negotiation stage as these solutions include contract generation, approval workflows, secure e-signature, and granular sharing and notification features. Sending contracts through electronic file systems greatly reduces the time they spend in transit and speeds the negotiation process between parties.

4. Payment

This is why you sell products and services, so get it right. After the contract is signed and the product has been delivered, tracking and monitoring payments may be an afterthought, but this is one of the most important steps in the whole process.

Look for invoicing, accounting, and CRM programs that integrate easily. Siloing accounting away from the rest of the quote to cash process can lead to reporting errors and communication break-downs.

Ask yourself:

  • Do the systems you use provide notifications for upcoming payments due?
  • How does accounting communicate with sales and product delivery teams?
  • Does your software record accurate records of invoices and payments?

Configure price quote software, CRMs, ERPs, and even accounting software that the company employs should all integrate and help team members streamline the payment process. Customers appreciate when payments go smoothly, without repeat invoices or unnecessary phone calls.

5. Analysis and Renewal

Congratulations! You’ve built a smooth-running quote to cash process. Take a moment to put your feet up and watch the process run itself — for maybe a couple of weeks. The final and most important step is analyzing your work, watching for contract renewal dates, and improving your margins through leaner practices.

Implementing software that both completes the assigned tasks and self-analyzes through reporting is helpful, but that’s not where analysis ends. Communication about each of the stages and follow-up with customers and suppliers will give your teams a 360-degree view of bottlenecks and inefficiencies.

* * *

Building a quote to cash process means paying attention to every stage of product development and delivery, as well as a gaining a deep understanding of customer needs and your own business objectives. Flowcharts, analytics reports, and other visualizations built into most enterprise sales tools will help your team understand your unique process. Most importantly, communication among stakeholders, sales, customers, accounting, and suppliers is crucial to success.

Top CRM Software Recommendations

1 monday CRM

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monday CRM is the customizable, no-code CRM that allows you to control your entire sales funnel and close more deals, while simplifying communication and collaboration. Automate manual work, capture and import leads, and centralize deal and contact info, all in one place.

Learn more about monday CRM

2 Pipedrive

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Pipedrive is a sales-focused customer relationship management tool that teams of all sizes love using. It visualizes your sales pipeline and helps to make sure important activities and conversations won’t get dropped. It also sports built-in forecasting, integrations with other software such as Google Apps, MailChimp and Zapier and an API for those who like to “roll their own” software solutions.

Learn more about Pipedrive

3 HubSpot CRM

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HubSpot is an intuitive CRM that makes managing your sales pipeline a breeze. Everything you need to track important metrics, set up time-saving flows and automations, manage clients seamlessly, and grow your business is available in one tidy dashboard. Plans are available for businesses at every stage of growth, starting at 100% free. Start taking the guesswork out of business management today with HubSpot CRM.

Learn more about HubSpot CRM

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