What does "Quote to Cash" Mean?

Malcolm Tatum
Malcolm Tatum

Also known as QTC or Q2C, "quote to cash" is a term that is used to describe the process of arranging a business process from the very beginning all the way through to final resolution. The process normally begins with the issuance of a quotation for goods or services to a prospective client, and completes when payment for those products is received and recorded in the accounting records of the firm. While there are several different strategies used to identify each of the steps included in this end-to-end business process, most aspects of the approach are considered common elements in any supply chain management and customer management strategy.

Businessman giving a thumbs-up
Businessman giving a thumbs-up

The quote to cash process begins with the creation of a quote for goods or services that is delivered to the customer for his or her consideration. Typically, the idea is to make sure the quote is as accurate as possible, although there is normally an understanding that the quote does not constitute a final offer from the supplier or vendor, and that the final sales price may change if some sort of extenuating circumstances should come to light. The quote serves the purpose of providing the basis for ongoing dialogue between the vendor and the potential client.

In many cases, the quote will be converted into a sales order and the pricing will transfer from the quote directly into the order. This segment of the quote to cash process moves the relationship to a new level as the customer chooses to accept the pricing and places an order with the vendor. The process of order management involves reviewing the order with the customer to make sure it is accurate, then submitting the order for fulfillment using the usual channels provided in the vendor’s operation.

After the sale order is received, the quote to cash process moves on to the order fulfillment stage. Here, the vendor moves to prepare the order according to the terms of the agreement between the customer and the vendor. Once the order is prepared, it is delivered to the client. At this stage, the client is responsible for reviewing the delivered order. If there are any issues, those must be reported to the vendor quickly, making it possible to take steps to correct the problem and provide the client with satisfaction.

Assuming there are no issues with the nature of the delivery and the items that are delivered, the quote to cash moves on to the next step of invoicing the order. An invoice provides the customer with the documentation necessary to remit payment in a timely manner. In most cases, a copy of the invoice is included in the payment transmission, or the invoice number is referenced along with the remitted payment. This allows the vendor to receive and record the payment properly, applying the amount to the open invoice and deducting the payment from the total owed on the customer’s account. Once that payment is applied, the quote to cash process is considered complete.

Malcolm Tatum
Malcolm Tatum

After many years in the teleconferencing industry, Michael decided to embrace his passion for trivia, research, and writing by becoming a full-time freelance writer. Since then, he has contributed articles to a variety of print and online publications, including wiseGEEK, and his work has also appeared in poetry collections, devotional anthologies, and several newspapers. Malcolm’s other interests include collecting vinyl records, minor league baseball, and cycling.

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