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What Is Quote to Cash?

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The GoCardless content team comprises a group of subject-matter experts in multiple fields from across GoCardless. The authors and reviewers work in the sales, marketing, legal, and finance departments. All have in-depth knowledge and experience in various aspects of payment scheme technology and the operating rules applicable to each. The team holds expertise in the well-established payment schemes such as UK Direct Debit, the European SEPA scheme, and the US ACH scheme, as well as in schemes operating in Scandinavia, Australia, and New Zealand. See full bio

Last editedOct 20212 min read

Landing that big sale is a great feeling, but until you have the cash in hand you can’t close the books just yet. The quote to cash process involves several steps, from agreeing upon a price to receiving payment. We’ll break down the quote to cash cycle for you below, so that you can take control of the process for greater sales speed and efficiency.

What does quote to cash mean?

First things first: what is quote to cash exactly? This term is used to refer to the full sales process from start to finish. It includes all the steps included along the way from configuring your products to sending out price quotes and receiving payment. If you work in manufacturing or the service industry, you likely work with your customers to provide custom quotes. You’ll need to tailor your products or services to customer needs, deliver the product, and then go through the full invoicing process. As a result, the quote to cash cycle involves numerous stages to cover customer interaction from beginning to end.

Understanding the quote to cash cycle

No matter your industry, there are six basic steps to consider when looking at the quote to cash process.

Configuration: The vendor and customer discuss the customer’s needs. During this first step, the job’s scope and specifications are laid out so that the vendor can draw up a custom quote.
Quote: After discussing the customer’s needs, the sales department can create an accurate price quote taking factors like raw material, time, labor, and profit margin into consideration. The business will present the client with a detailed quote. At this stage, you might throw in discounts or coupons to entice the client to commit to the quote.
Contract: There’s room for negotiation at this third stage of the quote to cash cycle, as the customer receives the initial quote and proposal. Once accepted, a contract is drawn up and signed by both parties.
Billing and Payment: The accounting team uses the quote and contract as the basis for sending out an itemized bill to cover all the costs in question. It can be helpful to automate this stage with invoicing and payment acceptance. For best results, offer your customers a selection of offline and online payment methods.
Revenue Recognition: Each job provides its own treasure trove of information and data. Sales staff should analyze sales at this stage, using information for future promotions with potential clients down the road. You also need to officially record the sale in your accounting books, recognizing the revenue once payment has been received
Reorder: The sale’s complete and payment received, so now it’s time to renew the cycle afresh by offering the customer another product or service.

Understanding quote to cash challenges

The full quote to cash cycle is straightforward, but if there are any problems at each stage it can cause the full process to break down. A lack of communication between departments can be one common issue. While the marketing department might deal with the configuration stage, the accounting department will handle invoicing and payments. Inefficiencies can lead to lost sales and reduced revenue, so it’s important to overcome common challenges. Delayed payments, lost quotes, or contracts that leave out important details can all cost your business money.

Quote to cash management tips

Perhaps the best way to streamline your quote to cash management is by using automated systems. From accounting software to a customer relationship management (CRM) system, there are numerous ways to connect the dots and keep each step of the cycle joined up. When comparing automated tools for quote to cash management, look for options that provide:

Customer relationship management
Contract management
Configure price quotes
Revenue recognition

All-in-one automated software solutions let sales, marketing, and accounting teams access the same dashboard, linking each step of the quote to cash process. This brings everyone onboard for a more joined-up approach to each sale.

We can help

GoCardless helps you automate payment collection, cutting down on the amount of admin your team needs to deal with when chasing invoices. Find out how GoCardless can help you with ad hoc payments or recurring payments.