Quote-to-cash is a process that shortens turnaround times, reduces the chance of errors and increases your profits. Because no matter how much you enjoy producing your machines, ultimately, of course, you have to make money. In this article you will read what quote-to-cash or QTC is, what an optimal quote-to-cash process looks like, and we look at the best CPQ software to support the process.
First, let’s look at the definition: quote-to-cash is the entire sales process, which starts with the customer choosing his desired machine or product and ends with the customer paying his invoice. It may sound simple, but the entire quote-to-cash process contains a lot of steps, and in many cases those steps have to be taken several times. We don’t have to tell you how much administrative hassle this involves, how often you duplicate data entry for the various systems of different departments and how much time you spend in this process on unnecessary contact with your potential customer.
With quote-to-cash you:
Of course, you want to set up the quote-to-cash process as sleek as possible, so that you can efficiently get from customer requirements to cold, hard cash. Let’s work out the process in full.
If you look at a standard pre-production process, meaning everything that needs to happen from the time the customer sits down with you until his machine goes into production, then quote-to-cash consists of a certain number of steps.
Quote-to-cash starts with the interaction between the customer and the salesman. Often there is a dealer in between too.
The sales rep validates the configuration with sales engineering, from where things may still need to be checked with engineering. Then the right things have to be purchased before it is actually produced.
After production, the machine is delivered and installed, after which you can finally send your invoice. Even if we assume that this process runs smoothly and that nothing needs to be transferred from production back to sales or back to the dealer or customer in the meantime, it is already a viscous and long process. In the entire process, a lot of information is transferred manually, which doesn’t help the turnaround time or the number of errors. And that in turn leads to frustration in the entire chain.
Before we look at how you can optimize the quote-to-cash process, it is important to take a moment to consider the challenge. After all, the move to QTC is not necessarily easy. Especially with configurable products, there is usually an awful lot of manual work involved; even the quote might still be manually logged as an order. It is important that you realize that the extensive automation of your pre-production process is quite a challenge, but it is also extremely beneficial.
By setting up the QTC process as efficiently as possible, you create the opportunity to earn more money. It is very important that you choose best-of-breed solutions: specialized software for the automation of specific processes. These tools can all be easily integrated with each other using APIs or low-code platforms. Think, for example, of specialized CPQ software that can be easily linked to your ERP package.
An efficient and digital QTC process actually starts with CPQ software. With a CPQ solution you can optimize your order intake and easily open a digital sales channel. Moreover, you can also use it for dealer management. And what’s more: your dealers order your products via CPQ, as it were, and even take over the entire order intake. Fully automated! So you don’t even have to make quotations or take orders from your dealers anymore.
But that’s not all. When your CPQ solution allows you to sell your products online through an online configurator, you are extending the QTC process to a Lead-to-Cash process (LTC). This means that your online configurator also takes care of your lead generation via your website or dealer environments. Apart from the efficiency gains that you achieve by digitalizing your quote-to-cash process, there is an enormous potential for leads to make error-free quotations and orders.
Here are two examples of integrations that provide clear added value during the QTC or LTC process: CRM and ERP.
Salesforce is one of the most widely used CRM packages worldwide, also in the realm of manufacturing companies. With a Salesforce CPQ integration, you take a big step towards a digital QTC or even LTC process. Imagine the following workflow:
You open a new sales opportunity in Salesforce CRM, where you enter your lead or prospect’s contact information. This data is immediately synchronized to CPQ and there a configuration is started with all the customer data from Salesforce. In CPQ, it is now time to configure the right product. The configuration is added to the quote and with all the correct price settings immediately sent back to Salesforce. Is the quotation accepted in Salesforce? Then the rest of the logistics process can begin.
This same trick also applies to integrations between ERP and CPQ, in this case SAP. Now you start the process in CPQ. First of all, all your items and prices are already synchronized. Then you open an empty quotation and add the desired configuration of your lead or prospect. This always results in an error-free quote and prices. Under the surface, a multi-layer parts list is created immediately, and when the quotation is accepted, it can be entered directly into SAP as a production order. Digital order intake at its best!
Besides Salesforce and SAP, there’s also other software that integrates with CPQ to create a sleek quote-to-cash process, for example Microsoft Dynamics 365.
Elfsquad CPQ is the source of all the necessary logic and knowledge required to sell your complex products relatively easily and then guide them through the rest of the process as smoothly as possible. The translation from sales to production happens directly in Elfsquad CPQ, and all the knowledge from engineering is already logged. Connect Elfsquad with a best-of-breed ERP like SAP, CRM like Salesforce and other software necessary for your process and you’ll take a big step in the right direction. We gave two examples of integrations in this blog, but Elfsquad CPQ easily integrates with other ERP, CAD, CRM, low-code applications and many more systems.
Are you curious about the possibilities?
Elfsquad removes all worries from your pre-production process. With Elfsquad as backbone, we realize the digital factory that smart industries have been trying to find for so long. We do this through a product configurator, with integrated solutions for marketing, sales, and operations.
Let us know what you think.