What is Quote-to-Cash? Everything you wanted to know.
by
Sandeep Jain
|
August 25, 2024
Quote-to-cash is the most fundamental business process, yet it is the least understood and even the least-known term.
Well, not anymore.
Quote-to-cash is a business process that covers a set of steps, starting with generating a sales Quote and ending with receiving the money (Cash) from the customer and recording the transaction in the General Ledger.
The quote-to-cash process involves two primary systems:
CPQ (Configure-Price-Quote) — Used by the sales reps to configure a deal for the prospect, e.g., length of the contract, billing terms, etc., price it (add discounts that are usually based on the overall deal size, contract length, etc.) and then generate a Quote (usually a PDF form) that is then sent to the customer.
Billing — Used by the billing team to generate an invoice, send an invoice, and then collect money from the customer.
Note that there are other tools that can be part of the Quote-to-cash process as well.
CLM (Contract-Lifecycle-Management) — Used by the legal team to generate an MSA (Master Services Agreement) for the end customer. Note that most companies use a standard services agreement (e.g., here’s the one for Sentry) as a default for most customers. However, larger customers would often demand specific terms, e.g., wanting quicker response times on critical issues or support in different timezones, or changes to liability cap, etc.
E-Sign — Used by the sales reps to get e-signature for the proposal.
Payment Processor—If the payment is made through a credit card, a payment processor is used to accept and charge the credit card.
Tax Processor — Usually, the invoice includes sales tax, which the tax processor generates.
Quote-to-cash
Note that CPQ and Billing have traditionally been separate systems, but in the modern revenue architecture, they are combined into one.
Related terms to Quote-to-Cash are the following, though they are used mostly for pedantic purposes only.
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