Quote to cash (QTC) is the process of managing a business from start to finish, beginning with issuing a quote for goods or services and ending with payment received and recorded in accounting records. The process involves creating a quote, converting it into a sales order, fulfilling the order, and billing the customer.
Also known as QTC or Q2C, “quote to cash” is a term that is used to describe the process of organizing a business process from inception to final resolution. The process normally begins with issuing a quote for goods or services to a prospective customer and is completed when payment for those products is received and recorded in the company’s accounting records. While there are several strategies used to identify each of the stages included in this end-to-end business process, most aspects of the approach are considered common elements in every customer management and supply chain management strategy.
The cash quote process begins with the creation of a quote for goods or services which is delivered to the customer for consideration. Typically, the idea is to make sure the quote is as accurate as possible, although it is usually understood that the quote does not constitute a final offer from the supplier or seller and that the final selling price may change if some sort of extenuation the circumstances should come to light. The quotation is intended to provide the basis for an ongoing dialogue between the seller and the potential customer.
In many cases, the quote will be converted into a sales order and the price will be transferred from the quote directly into the order. This segment of the cash quote process takes the relationship to a new level when the customer chooses to accept the price and places an order with the vendor. The order management process involves reviewing the order with the customer to verify its accuracy, then submitting the order for fulfillment through the normal channels provided in the supplier’s operation.
After receiving the sales order, the quote for cash processing moves to the order fulfillment stage. Here, the seller moves to prepare the order according to the terms of the agreement between the customer and the seller. Once prepared, the order is delivered to the customer. At this stage, the customer is responsible for reviewing the delivered order. If problems arise, these should be reported to the supplier quickly, making it possible to take steps to correct the problem and provide customer satisfaction.
Assuming there are no issues with the nature of the delivery and the items being delivered, the cash quote moves on to the next stage of order billing. An invoice provides the customer with the documentation needed to make payment in a timely manner. In most cases, a copy of the invoice is included with the payment transmission or the invoice number is referenced with the remitted payment. This allows the seller to receive and post the payment correctly, applying the amount to the open invoice and deducting the payment from the total due in the customer’s account. Once payment is applied, the quote to cash process is considered complete.
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