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The Quote-to-Cash Process

The Quote-to-Cash Process

Quote-to-cash is a term for the whole sales process, from configuring and pricing products to getting quotes, getting customer approval, taking orders, and keeping track of revenue. Think about everything that goes into making a custom quote. This can mean talking with the customer about what they want to be quoted, making sure the specs are right, and then making a quote for the client to approve.‍This is just the first step in the process from quote to cash. The next piece of this puzzle is the process of negotiating the quote, billing the client for the order, and getting paid. It can even include re-orders and renegotiations, which are sometimes used when a customer comes back to buy more products that were already set up.‍This process is important to the work of your company no matter what software you use. But it's also a part of your business that needs to be simplified and updated so it works better.

The Quote-to-Cash Process

What is the quote-to-cash process?

The quote-to-cash process is made up of six main steps. These are:

  • Configuration: This is where the customer chooses exactly what they want and lets the company know what they need for their quote.
  • Price/Quote: Here, the sales department figures out exactly what will go into making this product, how much it will cost to make, and how much of a profit the manufacturer wants to make on the quote. The sales department then decides on the price per unit and gives a detailed quote for the order to the client.
  • Contract: This is the formal proposal and contract. It is made when the customer gets the quote and decides to accept it. After they sign, the products can be made by the production line.
  • Billing: Once the quote is done, the accounting staff will send out an itemized bill and collect the money owed.
  • Analysis: The sales staff can then look at the orders that have been placed and work on promoting sales with other possible clients. At this point in the process, you can make changes to make the process better.
  • Renewal: If the customer wants, he or she can also renew the order at a later time to buy more of the same product that was already set up. The company can also suggest that the customer renew and can cross-sell or upsell.

The quote-to-cash process is made up of these six steps. You can see that the process needs to be integrated and streamlined so that your business can run well. Many businesses forget about this last step, which is analysis. If you don't look at both your successes and your problems, your business won't grow in the years to come.

Going from a quote to a cash payment

The "quote-to-cash" process can be hard to figure out at times. One of the problems is that there are so many parts that need to work together. All of these parts have to work together, just like a machine. If one of them stops working, it can cost you money.

If the configuration doesn't go as planned, if a quote is late, or if the follow-up analysis isn't done, you could lose sales and waste money because your production line isn't working at full capacity.

This is why automating your process is so important. By doing this, you can speed up the process and not worry about wasting time or money.

Automating the Quote to Cash process

So, how do you automate the process from quote to cash? CRM, CPQ, and ERP solutions are all tools that can help you do this.


A CRM system keeps track of how you and your customers interact. It helps you keep track of the most recent contact information and sales data. It also helps you market to those clients, sell to them, and give them good customer service.

CRM software fits into the quote-to-cash process by making sure you have all the necessary information for signing contracts, billing, collecting, and doing post-sale analysis and marketing.

Configure Price Quote (CPQ)

Your CPQ solution is used to make a product that is made just for you. With CPQ software, the customer can either talk to a salesperson who enters the product's details into the system or, if you have an online store, they can do it themselves from your website.

The software then checks to see if the product can be made to those specs and makes a Bill of Materials (BOM). At this point, the CPQ software figures out how much it will cost to make the product and can be set up with pre-set profit margins to help you figure out how much to charge for the product.

The next step is to make a quote, which is then sent to the client for approval. When it comes back as approved, the project can move forward on the production line and can even make a professional contract for the client to sign.

All of this is done much more efficiently than it was in the past, when there was a lot of back-and-forth between sales, engineering, and production. Because of this, all of these departments can do their jobs better.

Enterprise Resources Planning (ERP)

An ERP system keeps track of your inventory in real time, so that your different departments can make decisions based on the best information. This fits into the quote-to-cash platform by making sure you always keep track of your internal inventory.

If a customer orders a configured product and the CPQ system makes a bill of materials for that product, your ERP keeps track of how many items you have on hand, how many need to be made, and how many need to be ordered from an outside vendor. This makes sure that the whole process goes smoothly with few or no stops.

What are Quote-to-three Cash's layers?

The quote-to-cash process can also be thought of as having three separate parts. They are CPQ, Contract Management, and Revenue Management, all of which were already mentioned.

As it moves into production, the CPQ layer takes care of the configuration, quoting, and ordering.

The Contract Management layer makes it easy to make contracts for the configured order quickly. These contracts can be legally binding documents like NDAs (Non-Disclosure Agreements).

The Revenue Management layer includes things like billing and renegotiating contracts that have to do with getting paid for an order.

Who Owns the Quote-to-Cash Process?

The quote-to-cash process is defined by the fact that it is not "owned" by a single division or department. This is another reason why setting it up and making it work well is hard and complicated. For example, the Product team is in charge of coming up with new products, and marketing is in charge of building up the value of a brand. Quote-to-cash ownership works in a similar way, without a single owner or department in charge of the delivery.

Several teams, like sales, delivery, and finance, work together to make the quote-to-cash process work. Even though each team has a specific role and function, like the finance team being in charge of accounts receivable and revenue management, all departments must combine their skills and work together in a way that is efficient and works well with others.

How Startups Mess Up the QTC Process & How To Fix It

The process is slow 

Having multiple teams involved causes slowdowns especially as your business grows. Having up-to-date payment terms, invoice schedules, etc. will make your quoting process easier. This will cut down on how many changes the delivery and finance teams will have to deal with and fix.

Contracts don’t have set terms and conditions

It’s important to set a standard for contracts that are well-written and have terms and conditions that customers fully understand. Misunderstandings will always lead to more confusion in the long run.

There’s no approval process

A slow or broken approval process can put at risk both an engagement and the relationship with the customer as a whole. It is important to set up an approvals process that works well and automatically alerts customers and other stakeholders when they need to pay attention and sign something.

Prorating new services into the contract isn’t done

If a customer adds new services during an engagement, divide the cost by the number of services and add it to the contract and billing schedule. And unless it's clear that it's a one-time purchase, add the new service to the agreement and fee for the next year.

How Decimal Makes Accounting Easier

Decimal provides accounting operations for small businesses: bookkeeping, technology setup/support, bill pay, payroll, and more. Think of Decimal as your back office on autopilot. 

Here’s why you should work with Decimal:

  • Dedicated accounting team: Led by a cloud accounting specialist, and supported by technology experts, we're designed to support all of your back office needs
  • Automated back office: Decimal leverages technology to simplify your back office and eliminate work for you. It's not just bookkeeping: we'll take care of bill pay, payroll, invoicing, and more.
  • Fixed pricing with no hidden fees: Work with your Decimal team without the worry of extra billable hours. You'll never be charged more than a fixed price, allowing us to work together to best streamline your financial operations.

Contact us to learn how Decimal can help your business.

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