Billing can be complex. And revenue control in billing is an important part of ensuring your customers are happy, your business succeeds, and the rest of the business functions well. Business solution providers are looking to remove friction from the selling motion, get paid faster, get paid more accurately, and be assured their customers are paying on time. The good news is that this can all be achieved with a comprehensive quote-to-cash strategy for B2B billing.

The quote-to-cash (Q2C) process forms the glue that holds together no matter how large or small your business is. It helps to develop the relationship with customers and helps you to understand their wants and demands. It also allows you to gather the necessary information in order to quote your products/services accordingly and automate your approvals.

What is Quote to Cash (Q2C)?

At a high level, one of the main purposes of Q2C is to provide a much clearer understanding of how quotes result in opportunities and revenue. It brings together Sales, Product, Operations, and Finance to create a single process flow that satisfies every function's requirements in a streamlined and efficient manner. This creates an accurate picture from start to finish which can be used as a reference for future sales opportunities and provides a multitude of opportunities for refinement based on real data.

Everything that happens in the quote-to-cash process impacts a business’s bottom line. In other words, it all must work as planned. The last thing a CFO needs is a faulty information flow or a single point of failure which results in costly errors and delays; or worse, revenue leakage.

Because Q2C covers so many different processes, it's not surprising that many companies struggle to optimize the sales and delivery cycles. The solution lies in gaining a deep understanding of the sales process, analyzing sales activity to identify drivers for improved close rate, margin-per-sale, and optimized processes. The good news is that there are several technology vendors that can help companies optimize their Q2C process. 

This kind of optimization means faster and more accurate quoting, lower-order fulfillment costs, streamlined finance processes, enhanced customer service, and ultimately better sales results. There are also countless advantages associated with the upsell and renewal processes that can be realized.

Steps for the Quote to Cash Process

B2B companies use quote-to-cash processes to manage their procurement workflows, deal with legal and regulatory requirements of quoting, billing, and collecting payment for products or services sold. Each step in the process has a direct impact on a company's sales efficiency and revenue growth, as well as its sales and marketing efforts. 

Making sure these processes run smoothly can mean the difference between profit and loss, or growth and stagnation.

Let's run through the quote-to-cash process and how automating every step can dramatically improve the customer's journey — whether you focus on one-time, subscription, usage, or some combination of pricing models.

1. Opportunity

The quote to cash process is a series of events starting with the capture of quote information, and ending with payment. To streamline and automate payment, and ensure consistent efficiency and data capture, you need tight integration between your CRM, Billing, and ERP/GL systems. 

This integration should ideally be bidirectional and allow your billing system to automatically send information about your customers, their purchases, and billing updates to your CRM in addition to just receiving downstream order details.  This is important to ensure the sales, marketing, and finance teams are in sync with a detailed 360-degree view of their customer’s usage, billing, and payment history.

2. Pricing and Product Modeling

The next step in the quote to cash process is to deeply understand the pricing model, whether for a product, service, or combination of the two. Which portions of a Subscription or Bundle are recognizable immediately, vs over the term of the arrangement?  How do the cost/margin profiles of each Product component vary as the customer scales post-sale? These are the types of things that you will need to understand, document, and implement into the product catalog that your quoting motion will operate off of.  A critical part of this process is being able to offer incentives such as promotions, discounts, and coupons to develop competitive prices, without sacrificing profits.

3. Quote

 It’s important that the quote is clear, concise, and purposeful. As a sales tool, a sales quote requires information from numerous internal stakeholders and is often prone to delays and approvals before they can be sent to your client. Your sales team should be able to quickly show customers a variety of individual and bundled products and services - as well as their price, along with any discounts, year over year scaling commitments, and other varying levels of personalization that B2B buyers will demand. (Bigger your ACV, more personalization options you will want to offer your sales team)

4. Order

Once the customer places the order via an integrated digital signing process, various teams and individuals work behind the scenes to ensure that the order is processed and fulfilled. Order fulfillment includes processes that are involved in distributing orders to suppliers for processing as well as various API-driven provisioning into your own systems.

A robust billing platform can improve efficiency and accuracy by automating and streamlining these workflows and notifications. The ultimate goal is to maximize customer satisfaction through streamlined order processing and fulfillment.

5. Invoicing 

Once the order is fulfilled, it’s time to send the invoice so you can get paid. If you provide incentives, it's important to include them as well. The success of your invoice process is directly related to automation. A billing system that can automate the entire process of managing complex usage rating and mediation, invoice approval processing, creating customizable invoice templates, and taking payment is a must-have for any company that sells products or services online.  Keynote here is this invoicing process will continue long after the initial sale for any Subscription or Recurring model, it is critical that you get this right!

To ensure that the billing data in your ERP is error-free and consistent with other financial data, it’s essential to integrate your ERP with the billing software.  There are different models available here that vary from replicating every transaction to summarized and aggregated models that only provide the data the ERP / GL requires.

6. Payment

Payments delayed or issued before a certain date need to be processed before the end of the month. This can be challenging with manual processing and can result in significant costs to a company. You need a billing system with AR automation capabilities and built-in workflows so that you can automate late fees, account suspensions, and customer notifications.

A modern billing engine allows you to automate many of the tasks associated with running a billing system — from managing your invoices and due dates to collecting payment and following up with overdue accounts. By integrating with your existing systems, you can streamline your billing operations and gain valuable insights into your accounts. With the right platform, you can truly make the most of your billing — driving down costs and boosting revenue for your business.

7. Revenue Recognition

To stay compliant, companies must know how to track and report revenue in compliance with regulations like ASC 606 — and they need to do it efficiently, without extensive manual work. A cloud-based billing solution that works with your existing financial system will help you stay on top of your revenue recognition and reporting needs.

In the highly competitive world of business, organizations that can optimize their Quote to Cash processes will have a competitive advantage when it comes to closing deals, growing revenue, and gaining cost savings from operational excellence. 

Leveraging the right tools to automate the Q2C process can dramatically improve your sales cycle, eliminate manual processes and get sales reps back to selling. Understanding all the phases of the Q2C process is good, but it’s equally important to know which tools will help you achieve success in each phase. 

The right billing platform will help you streamline your invoicing, payment processing, and customer service processes while helping you avoid costly mistakes. LogiSense helps companies automate every step of the process from quote to cash.

Contact one of our billing experts to schedule a personalized demo.