Quote-to-Cash (Q2C or QTC) is a process that connects fairly distant points in the sales process.

From the moment a request for a quote is received and all the way to shaking hands over a contract and getting paid, QTC dictates how intermediate sales goals are achieved.

However, Q2C and CPQ are often used in the same context, which creates some confusion and leads us to the need to define these terms and use them correctly.

Without further ado, let’s get into it.

Key takeaways

• Quote-to-Cash (Q2C/QTC) is a process that companies follow from the moment a quote request is received to the moment when the payment appears in their account.
• Q2C includes subprocesses and tools facilitating quote generation, delivery, negotiation, deal closing, invoicing, and receipt of payment.
• CPQ is part of the Q2C framework; it starts immediately upon receiving a quote request and focuses on heavily automated product configuration and quote generation.
• CPQ solutions can offer different sets of features, from quote generation only to a complete suite of tools addressing most of the Q2C framework
• Adoption of Q2C and CPQ tools and procedures helps organizations stay competitive and substantially shorten sales cycles while achieving higher lead conversion and sales volumes

What is the quote-to-cash process

Q2C is a procedural framework that regulates how organizations process sales opportunities and focuses on fast and accurate quote/proposal generation and management.

It is very important to understand the boundaries of Q2C, as it does not cover the entire scope of a typical sales funnel.

Q2C starts exactly when a potential customer requests a quote for a product or service and ends when payment (full or partial) for said service or product is received.

In reality, the Q2C stage can be preceded by a variety of marketing activities resulting in sales opportunities and followed by post-sale activities that may include efficiency analysis, cross/upsell planning, and process improvements.

In summary, the quote-to-cash process is a segment of the overall sales and marketing workflow that aims to turn sales opportunities into actual money in the company’s account.

Why are Q2C and CPQ NOT the same thing

The short answer is that these are two intertwined processes and CPQ is responsible for a particular segment of the Q2C workflow only.

Q2C is much wider, and CPQ is its integral part.

More on that right in the following section.

Configure: Determine customer needs and tailor product or service offerings.

Price: Establish pricing based on the configuration and customer.

Quote: Create and present a quote to the customer.

Negotiate: Discuss and adjust terms and pricing as necessary.

Contract: Finalize and agree on a contractual agreement.

Order: Process customer orders based on the contract.

Invoice: Bill the customer for the product or service.

Collect: Receive and process payment from the customer.

Recognize: Acknowledge revenue and report it financially.

How CPQ supports the Q2C process

Configure-Price-Quote (CPQ) is a subprocess of Q2C that varies greatly from company to company in terms of the level of its automation and efficiency.

It is also a set of tools and practices that facilitate and accelerate the creation of accurate, comprehensive quotes to be presented to the customer.

CPQ is the entry point in the Q2C process — its importance should not be understated.

This statement holds all the more true for complex, configurable products with a variety of modifications, options, upgrades, and accessories.

Manual configuration of such products requires highly technical sales reps or, most often, detailed quote reviews by technical teams, resulting in very long sales cycles — something you want to avoid at all costs.

The most important thing, however, is that the CPQ process at any given company typically has massive optimization and automation potential.

While some businesses still invest countless hours of manual labor to come up with quotes (and drown in inefficiencies), others thrive in a fully automated CPQ environment based on modern CPQ tools, CRM/ERP systems, and powerful proposal management platforms.

Therefore, CPQ supports the overarching Q2C process by minimizing the time and effort required to produce a high-quality, detailed, and error-free quote and push it forward in the Q2C workflow.

Benefits of CPQ software

The benefits of CPQ software are hard to overlook.

Everyone can sell complex products

First and foremost, CPQ enables regular sales reps with no serious technical background to configure products of any complexity without having to consult with the product team, saving time and money for the company.

They work with a wizard-like interface to build the requested product configuration from the ground up while the CPQ software takes care of part compatibility, suggests upsell and cross-sell options, applies discounts, and pulls up-to-date part data from the company’s product catalog, PIM or ERP system.

Say goodbye to configuration errors

The second advantage of a CPQ-based approach is that it effectively rules out the possibility of misconfiguration and incorrect pricing.

Predefined rules ensure that the final configuration will not have incompatible components while prices are taken directly from the ERP system and do not require validation.

Quote faster, sell more

The third benefit of implementing CPQ is the ability to quickly create very detailed quotes that get the customer’s questions answered right away, so your sales reps avoid prolonged back-and-forth via email or phone to clarify details.

On top of that, modern CPQ tools cover a wider segment of Q2C, and also offer proposal generation, document management, eSigning, and payment functionality in a single product.

In summary, the use of CPQ software leads to higher conversion and close rates, faster sales cycles, and better scalability of your sales operations because your reps no longer have to be product gurus and can be onboarded very quickly.

The right solution for all your quoting needs

If you are new to modern sales automation, adopting every single principle of Q2C and CPQ to the fullest may seem challenging.

However, it doesn’t have to be so.

A good starting point would be to pick a well-rounded solution that will cover as much of your sales processes as possible and then decide which aspects of it you’d like to improve further.

PandaDoc offers a host of value-packed tools that will help you bring the much-needed automation to your Q2C process:

• CPQ functionality with a product catalog and configurable rules
• Seamless integration with a variety of CRM systems and payment gateways
• Hundreds of proposal templates and a convenient editor to create custom ones
• Quote/proposal status tracking
• Integrated eSigning tool
• Invoicing and easy connectivity with payment gateways

To get a better idea about PandaDoc and how it fits with your needs, book a demo right away or sign up for a 14-day trial and see everything with your own eyes.